Strides Pharma Science (STAR) Q2 25/26 earnings summary

Executive summary

• Q2 FY26 revenue grew 4.6% year-on-year to ₹12,208 million, with operational PAT up 84% to ₹1,403 million and EPS at ₹15.2, up 83.8% year-on-year.

• H1 FY26 revenue rose 5.5% year-on-year to ₹23,406 million, with operational PAT at ₹2,543 million, up 82.6% year-on-year, and EPS at ₹27.6, up 82.2% year-on-year.

• Profit after tax from continuing operations for Q2 FY26 was ₹1,315 million, compared to ₹723 million in Q2 FY25.

• Growth was primarily driven by Other Regulated Markets and disciplined execution across all key markets.

• A major demerger of the CDMO and Soft Gelatin business was completed, resulting in a one-time gain of ₹31,881 million, presented as discontinued operations.

Financial highlights

• Q2 gross margin at ₹706 crore (57.8%), up 500 bps year-on-year; H1 gross margin at ₹1,381 crore (59%), up 410 bps.

• Q2 EBITDA at ₹2,316 million (19% margin), up 25.4% year-on-year; H1 EBITDA at ₹4,500 million (19.2% margin).

• Q2 operational PAT at ₹1,403 million, highest ever; operational EPS at ₹15.2.

• Net debt reduced by ₹733 million in H1 FY26 after funding ₹1,492 million of capex from internal accruals.

• Q2 FY26 finance income included a one-time income of ₹185 million.

Outlook and guidance

• Long-term U.S. revenue target of $400 million by FY28 remains intact, with 60 dormant ANDAs to be relaunched over the next 3 years.

• Other Regulated Markets expected to mirror U.S. market size in 2-3 years, with portfolio expansion and new customer acquisitions.

• H2 is expected to be better than H1, continuing the historical trend.

• Growth Markets expected to have lumpy quarters until business stabilizes in the next two years.

• The business is now evaluated as a single segment, "Pharmaceutical," following the demerger.