This Mukul Agrawal portfolio pharma stock surged 12% in subdued market

Shares of Strides Pharma Science surged 12 per cent to Rs 736.05 on the BSE in Wednesday’s intra-day trade in an otherwise subdued market. In comparison, the BSE Sensex was down 0.2 per cent at 77,985 at 09:56 AM. The stock had turned ex-spin off on December 6, 2024. 

 

Investor Mukul Mahavir Agrawal helds 1.4 million shares in Strides, representing a 1.52 per cent stake in the company, at the end of the September quarter, shareholding pattern data on the BSE showed.

 

On September 25, 2023, Strides had announced the creation of OneSource, a specialty pharma pure-play Contract Development and Manufacturing (CDMO) player, by integrating Stelis’ Biologics CDMO, SteriScience's Complex Injectables, and its own soft gelatine businesses into a single entity by way of a Scheme of Arrangement.

 

 

As part of the scheme, Strides' shareholders are to receive one share of OneSource for every two shares of Strides they hold in a share swap ratio of 1:2. OneSource is in the process of seeking final approval for the Scheme from NCLT, Mumbai Bench. The company aims to list on the bourses by March 2025, upon receipt of regulatory approvals.

 

Strides mainly operates in the regulated markets, and has an 'in Africa, for Africa' strategy and an institutional business to service donor-funded markets.

 

Meanwhile, the proposed demerger shall facilitate the creation of two distinct listed operating entities (Strides housing retained business and OneSource housing combined CDMO business), which will ensure focused leadership to drive growth in both the companies.

 

The scheme is further expected to increase the long-term value for shareholders of all the companies and other stakeholders by unlocking the intrinsic value of the identified CDMO business of the company and Steriscience, on listing of shares of OneSource, the company had said earlier.

 

In the September 2024 quarter (Q2FY25), Strides Pharma had demonstrated sustained growth across all markets fuelled by new product launches. The company's US operations reported its highest ever quarterly revenue of $75 million in Q2FY25. Further, a strong 31 per cent year-on-year growth in absolute earnings before interest, tax, depreciation and amortisation (Ebitda) and Ebitda margin improvement of 209 bps, reflects the company’s continued focus on operational efficiency and profitability.

 

Driven by effective debt reduction, cost optimisation, and growth in the US business owing to a strong pipeline and a redefined CDMO business, analysts expect healthy traction for the company in the coming quarters.

 

In FY25, Strides targets to grow its continuing business at 12-15 per cent, with a significant growth coming in H2FY25 based on targeted product launches globally. The company is confident of increasing its Ebitda margin in the range of 20 per cent to 22 per cent and intends to achieve Net Debt/ Ebitda ratio of less than 2x by end of FY25. The company is also committed to grow its US business and achieve revenues of $400 million in the next three years.

 

Meanwhile, Strides Pharma, in its FY24 annual report, said that the company’s focus remains on fast-tracked launches from its approved basket of ANDAs (260+ active ANDAs with 245+ approvals).  The company's aim is to launch an additional 60 products over the next three years to achieve the stated objective of $400 million in revenues.  Strides Pharma is making investments in new segments as a part of a long-term strategy to grow beyond $400 million, including entry into the nasal spray and 505(b)(2) markets. Moreover, the company is aiming for the first filing from the new segment within the next 12-15 months, the company said on September 2, 2024.