Strides Pharma Science (STAR) Q3 25/26 earnings summary

Executive summary

• Achieved highest ever quarterly EBITDA of ₹2,359m in Q3FY26, with operational PAT at ₹1,282m and EPS at ₹13.9, up 39% year-on-year; gross margins reached 59.8%–61.2% and ex-U.S. markets contributed 47% of revenue with 20% YoY growth.

• U.S. business remained flat due to delayed flu season and product discontinuations, but long-term growth drivers remain intact.

• Leadership strengthened with appointment of new CEO for North America and EVP of HR to drive growth and organizational capability.

• ESG/Sustainability score improved by 5 points to 80, reflecting focus on responsible growth and governance.

• Major one-time gain of Rs. 31,881.07 million recognized from the demerger of the CDMO and Soft Gelatin business, presented as discontinued operations.

Financial highlights

• Q3FY26 revenue reached ₹11,946m, up 3.6% YoY; gross margin improved to 61.2% (+280bps YoY); EBITDA margin rose to 19.8% (+160bps YoY).

• Operational PAT rose 39% YoY to ₹1,282m; reported PAT for the quarter at ₹2,081m, including gain from sale of investment property.

• For nine months, operational PAT grew 65% YoY to ₹3,824m, exceeding full FY25 PAT.

• Cash to cash cycle stable at 124 days; operational cash flow for nine months at ₹4,841m (70% EBITDA to operating cash conversion).

• Basic EPS for continuing operations for the quarter was Rs. 21.93, compared to Rs. 9.56 in the prior year quarter.

Outlook and guidance

• U.S. business revenue outlook reiterated at ~$400m by FY28, with ex-U.S. markets expected to mirror U.S. size in two years, driven by portfolio expansion and new customer acquisitions.

• Growth to be driven by relaunch of dormant products, investments in complex generics, and expansion in regulated and growth markets.

• CapEx guidance: ₹1,000–1,250m for maintenance, with additional opportunistic investments in global product rights.

• Tax rate expected in the 15%–18% range for the year.

• Focus remains on operating cashflow generation and continued debt reduction while funding capex from internal accruals.