MOSL: STRIDES SHASUN (Buy)-Muted 4QFY18-ANDA approvals remain the key
Strides Shasun: Muted 4QFY18; ANDA approvals remain the key
(STR IN, Mkt Cap USD0.7b, CMP INR387, TP INR481, 24% Upside, Buy)
- Weak US and institutional sales drag performance: 4QFY18 sales declined 1.9% YoY to INR6.6b (est. of INR7.9b), led by sharply lower partnered products sales in the US and minimal anti-malaria sales in the emerging market. Product mix change led to gross margin contraction of 100bp YoY, while lower operating leverage significantly impacted the EBITDA margin (-600bp YoY to 13% v/s est. of 18%). This, coupled with higher depreciation and lower other income, led to adj. PAT of INR105m. Exceptional loss of INR217m resulted in the company reporting a loss of INR44m. For the full year, STR's revenue grew 3% to INR28.4b, EBITDA margin shrank from 19% to 13% and adj. PAT declined 65% YoY to INR1b.
- Key concall takeways: (1) Although US sales were muted at USD21m in 4QFY18, STR guided for US sales ramp-up to at least USD120m in FY19 led by new launches and shift of partnered products to own front-end. (2) STR has products under development, which should aid growth in institutional ARV business post approvals. Also, renegotiating pricing for ARV contracts would support margins. STR is expected to maintain momentum in Australia by enhancing portfolio/pharmacy footprint and increasing sourcing from India.
Strides Pharma Science Ltd, formerly Strides Shasun Limited, is a vertically integrated global pharmaceutical company. The Company is engaged in the development and manufacturing of active pharmaceutical ingredients (APIs) and formulations, as well as biotech. Its business segments include Pharmaceutical and Biotech businesses. Its geographical segments are Africa, Australasia, North America and Europe, South and Central America, India and Others. The Company focuses on developing complex pharmaceutical products across therapeutic segments. The Company's products include general tablets, hard gelatin capsules, soft gelatin capsules, sachets, dry powders, dry syrups, potent drugs, semi solids, ointments and creams. It is also involved in supplying generics to hospitals approved by the National Health Service (NHS) and over-the-counter (OTC) products through retail outlets. It operates approximately 10 facilities, which are diversified across Asia, Africa and Europe.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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