Strides Pharma Science (STAR) Q3 24/25 earnings summary

Executive summary

• Achieved strong Q3 and nine-month results post-demerger of high-margin soft-gelatin business, with clean financials and no major adjustments.

• Unlocking value from the soft-gelatin carve-out delivered $900 million incremental value to shareholders via OneSource.

• ESG debut score of 76,000 in S&P Global Corporate Sustainability Assessment, outperforming industry peers.

• Board strengthened with new independent director, now five out of eight directors are independent.

• Reported consolidated revenue from continuing operations of Rs. 11,537 million for Q3 FY25, a 15% increase year-over-year; nine-month revenue at Rs. 33,749 million, up from Rs. 28,466 million.

Financial highlights

• Revenue grew 13.3% year-over-year for the nine months; Q3 US revenue at $73 million, YTD $214 million.

• Gross margin for Q3 at 58.4%, up from 53-54% YoY (restated for continuing business); nine-month gross margin at 56%.

• EBITDA for Q3 at INR 210 crores (18.2% margin); YTD EBITDA at INR 585 crores (17.3% margin).

• Reported PAT for Q3 at INR 90 crores; YTD operational PAT at INR 232 crores, reported PAT at INR 324 crores (includes INR 102 crores one-time gain from OneSource investment).

• Earnings per share (EPS) for continuing operations was Rs. 9.56 (basic) for Q3 FY25, up from Rs. 7.81 in Q3 FY24; total EPS for the nine months was Rs. 346.67, reflecting the demerger gain.

Outlook and guidance

• On track to achieve FY25 guidance: revenue growth of 12-15%, EBITDA of INR 750-800 crores, net debt/EBITDA under 2x, and US revenue of $275-290 million.

• US business guidance of $400 million by FY28 maintained, with 11-12% annual growth targeted.

• Other regulated markets expected to remain steady for 2-3 quarters, with growth breakout anticipated in H2 next year.

• CapEx expected at INR 150-200 crores annually for the next few years; R&D spend to double, focused on 505(b)(2) and nasal sprays.

• Targeting debt-free status in 2-3 years through free cash flow.