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 approximately $900 million in 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 growth of 13.3% year-over-year at company level for nine months.

• Q3 gross margin at 58.4%, EBITDA margin at 18.2%; nine-month EBITDA at INR 585 crores (17.3% margin).

• Reported Q3 PAT at INR 90 crores, EPS of 9.56; nine-month operational PAT at INR 232 crores, EPS of 25.2.

• One-time gain of INR 102 crores from continuing investment in OneSource post-demerger.

• Exceptional items for the quarter included exchange losses, legal expenses for product recalls, and minor impairments totaling a net expense of Rs. 24 million.

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.

• US revenue guidance of $275-$290 million for FY25 reaffirmed; long-term US business outlook up to 2027-28 remains positive.

• CapEx expected at INR 150-200 crores annually for next few years, with focus on R&D for new domains.

• Debt-free balance sheet targeted within three years if current trajectory continues.

• Management expects improved resource allocation and performance assessment post-demerger.