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-over-year, driven by profitability, geographical diversification, and balance sheet strength.

• Revenue growth was modest at 3.6% YoY, impacted by low offtake in Institutional Business and flat US operations, but offset by strong 20% YoY growth in Ex-US markets, which contributed 47% of Q3 FY26 revenues.

• Profit after tax from continuing operations for the quarter was Rs. 2,081.22 million, up from Rs. 900.40 million in the same quarter last year, with a significant one-time gain from the demerger of the CDMO and Soft Gelatin business.

• Management changes include appointment of Peter Hardwick as CEO for North America and Nandini Matiyani as EVP of HR to drive growth and organizational capability.

• ESG score improved from 75 to 80, reflecting focus on responsible growth and governance.

Financial highlights

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

• EBITDA grew 12% year-on-year to INR 236 crore, highest ever quarterly EBITDA; operational PAT for the quarter at INR 128 crore (10.7% margin), up 39% year-on-year.

• Reported PAT for Q3FY26 was ₹2,081m, including a gain on sale of investment property; other income for the quarter included a profit of Rs. 1,021.43 million from the sale.

• For 9MFY26, revenue grew 4.7% YoY to ₹35,352m, with operational PAT up 65% YoY to ₹3,824m.

• Cash-to-cash cycle stable at 124 days; operational cash flow for nine months at INR 484 crore (70% EBITDA to cash conversion).

Outlook and guidance

• US business revenue outlook reiterated at ~$400m by FY28, with multiple product relaunches planned and new investments.

• Ex-US markets expected to mirror US market size over the next two years, driven by portfolio expansion and new customer acquisitions.

• CapEx guidance for maintenance at INR 100-125 crore, with opportunistic investments for growth; focus remains on operating cashflow generation and continued debt reduction.

• Tax rate expected in the 15%-18% range for the year, possibly 15%-20% over the next couple of years.

• The business is now evaluated as a single segment, "Pharmaceutical," following the demerger.