Hold Strides Pharma Sciences; target of Rs 491: Sharekhan

Sharekhan recommended Hold rating on Strides Pharma Sciences with a target price of Rs 491 in its research report dated August 02, 2023.

Broker Research

August 06, 2023 / 11:08 IST

Hold

26 Aug, 2025 12:21

Volume

Todays L/H

Sharekhan's research report on Strides Pharma Sciences

Strides Pharmasciences Ltd. posted mixed results for Q1FY24. The reported sales growth was weak with a decline of 1.1% y-o-y (-5.7% q-o-q) to Rs. 930 crore versus our estimate of Rs. 1,097.8 crore. Reported sales growth lagged behind estimates due to a weak show in the emerging markets segment. At the same time, the company continued to make reported net losses (due to lower sales, higher finance costs and losses at associates including at Stelis Biopharma of Rs. 107.1 crore in Q1FY24 due to inventory write-downs from unsold Sputnik vaccines). It has announced a combined CDMO division’s formation under Stelis Biopharma with $400 million of revenues likely to be accretive from FY27 onwards, with an incremental capex of $30 million likely to be incurred over short-medium term. While we believe the company has a strong focus on margin expansion through calibrated product launches and market expansion in emerging markets, we also believe that higher debt and finance costs may remain a concern in the short to medium term, given the higher debt levels the company has.

Outlook

While we upgrade the estimates in line with higher operating margins in Q1, we downgrade the rating to Hold from Buy as the stock trades at ~17.2x/~11.4x its FY2024E/FY2025E revised earnings vs peers, indicating fair valuation levels for Strides with all catalysts priced in.

For all recommendations report, click here