Strides Pharma Science Ltd (NSE: STAR), a global pharmaceutical company headquartered in Bengaluru, India, reported strong financial results for the second quarter (Q2 FY24) ended September 30, 2023.
The company posted quarterly sales of ₹10,264 million, up 10% quarter-on-quarter and 21% year-on-year. This is the sixth consecutive quarter of growth for Strides, leading to an all-time high in revenues and EBITDA in Q2 FY24.
Strides’ gross margins stood at 59.3% in Q2 FY24, an increase of 158 basis points compared to 57.7% in Q2 FY23. In absolute terms, gross margins increased by ₹1,190 million year-on-year.
EBITDA rose significantly to ₹1,801 million in Q2 FY24, a 95% increase compared to ₹925 million in Q2 FY23. This growth in EBITDA was enabled by healthy expansion in revenues and gross margins.
Adjusted profit after tax (excluding share of joint ventures, exceptional items and tax credits) stood at ₹405 million in Q2 FY24.
Strides expects to meet its FY24 revenue growth guidance of 15% year-on-year in continuing businesses. With profitability metrics trending higher, the company is on track to achieve its FY24 EBITDA guidance of ₹7,000-7,500 million and reduce net debt-to-EBITDA ratio below 3X.
Commenting on the results, Arun Kumar, Founder and Executive Chairperson & Managing Director said, “We are pleased to report a strong Q2 FY24, delivering year-on-year revenue growth of 21% and achieving our highest ever reported revenue and EBITDA.”
Kumar added, “We remained focused on delivering consistent operating performance. We are on track to achieve the outlook we set out for FY24 at the beginning of this year on all financial parameters.”
The healthy financial performance in the last three fiscals has been driven by Strides’ strategic focus on regulated markets, optimization of manufacturing network, new product launches, cost optimization and expansion in emerging markets.
According to Kumar, revenues crossing ₹10 billion in Q2 FY24 is a significant milestone reflecting the company’s growth across key markets.
Revenues from the United States, the company’s largest regulated market, grew by 6% year-on-year to ₹4,993 million ($61 million) in Q2 FY24. The U.S. accounts for around 49% of total revenues.
Strides reported strong growth of 57% in revenues from other regulated markets (Europe, Canada etc.) to ₹3,269 million ($40 million) in Q2 FY24. The growth was enabled by new product launches, partnerships and expansion of customer base.
Revenues from growth markets (Africa operations, LATAM, MENA etc.) increased by 19% to ₹1,119 million ($14 million) in Q2 FY24. However, access markets revenues were lower by 23% due to the lumpy nature of tender-based institutional business.
As part of its manufacturing optimization, Strides completed the divestment of its Singapore facility in Q3 FY24. Products manufactured in Singapore have been successfully transferred to the company’s New York facility. This has helped complete network optimization for regulated markets.
The company remains confident of sustaining its growth momentum in FY24, driven by new product launches, geographical expansion, focus on complex products and continuous improvement in business quality.