Strides Pharma Science (STAR) Q2 24/25 earnings summary

Executive summary

• Q2FY25 revenue reached ₹12,011 million, up 17% YoY, with US operations at a record $75 million, driven by operational efficiency and relaunch of dormant products.

• Adjusted PAT for Q2FY25 was ₹1,103 million, with a turnaround from a loss in Q2FY24, reflecting strong operational efficiency.

• OneSource reported its third consecutive EBITDA-positive quarter, secured $95 million in fundraising at an 82% premium, and is set to commercialize GLP-1 in Q4.

• The group completed the amalgamation of Strides Alathur Private Limited and advanced the demerger of the CDMO and Softgel business, with regulatory and shareholder approvals in place.

• Commercialized products in the US increased to 71, with new product approvals and successful launches from the dormant portfolio.

Financial highlights

• Q2FY25 EBITDA was ₹2,358 million, up 31% YoY, with EBITDA margin at 19.6% and adjusted PAT at ₹1,103 million.

• H1FY25 EBITDA at ₹4,520-4,530 million, representing 45-47% of annual guidance, and H1FY25 revenue was ₹22,886 million, up 16.9% YoY.

• Net debt reduced by ₹1,325 million in H1FY25, with net debt at ₹19,025 million as of September 2024 and net debt to EBITDA at 2.1x.

• ROCE improved to 17.2% in H1FY25 from 12.8% at FY24 end.

• Gross margin for Q2FY25 was 58.5%, slightly reduced due to higher Access Market sales, but target range remains 59-60%.

Outlook and guidance

• Confident of achieving the higher end of revenue and EBITDA guidance for FY25, with revenue expected to grow 12–15% YoY.

• EBITDA guidance for FY25: ₹9,500-10,000 million (including OneSource), ₹7,500-8,000 million (excluding OneSource).

• OneSource FY25 guidance: revenue $160–$180 million, EBITDA margin 34%, with strong margin and price discipline.

• Net debt to EBITDA targeted below 2.0x by March 2025; net cash position expected by 2027.

• US business revenue guidance for FY25 is $285–$300 million.