Buy Strides Pharma; target of Rs 930: Motilal Oswal

Motilal Oswal's research report on Strides Pharma

STR’s 4QFY21 operational performance was marginally below our estimate. The robust performance in the US/Institutional segment within emerging markets was offset by subdued sales in other regulated markets on account of COVID-19. In addition to commercial manufacturing of the Sputnik vaccine by Oct’21, STR is building a basket of COVID-related medicines. The ANDA filing momentum is expected to pick-up in FY22, providing growth visibility in the US market.

Outlook

We cut our FY22E/FY23E earnings estimate by 6% each to account for increased opex associated with logistics and increased price erosion in select products. We value STR on a 12-month forward SoTP basis – EV/EBITDA of 12x/7x/6x for the Regulated/Emerging Markets/Institutional segment – to arrive at our TP of INR930/share. Maintain Buy.