Strides Pharma’s revenue grew by 6.1% yoy to Rs794.5cr in Q3FY19. EBITDA grew by 3.4% yoy to Rs127.1cr in Q3FY19 vs. Rs122.9cr in Q3FY18. EBITDA margins stood at 16% in Q3FY19 vs. 16.4% in Q3FY18 and 13.6% in Q2FY19. Adj. PAT declined by 38.1% yoy to Rs30.8cr vs. Rs49.8cr in Q3FY18, however on sequential basis, PAT grew by 1.4x. The results are in-line with our expectations and we continue to maintain positive view on the stock.
US business reported 30% qoq growth to Rs285cr ($41m) in Q3FY19.
In US, company now has 10 front-end products and their market share is as follows - Methoxsalen 61%, Ergocalciferol 54%, Acarbose 39%, Ranitidine 33%, Benzonatate 22%, Dutasteride 22%, Ketoconazole 20%, Calcitriol 19%, Efavirenz 17%, Mycophenolate 11%, and Buspirone 10%.
Strides has received 11 ANDA approvals in YTDFY19 and has continued success with the new product launches.
Australia revenues stood flat at A$48mn due to year-end channel de-stocking. Company launched 4 new products in Q3FY19 taking total launches to 14 products in FY19. Company has completed site transfers of all major products to Strides.
Revenue in Other Regulated Markets grew by 55% yoy and 14% qoq.
Africa branded business reported modest qoq, while institutional business continues to face headwinds.
Company has said that it is set to exit Arrow for a value of A$394mn to entities owned and operated by Dennis Bastas. Post this, Strides will also receive A$39mn in minority interest. Strides will also remain a preferred supplier for 10 years to new entity Arrotex and will be able to retain 40-50% of current EBITDA and IP for all products.
Company will receive A$300mn as upfront payment after the Arrow exit, while the balance A$94mn is to be deferred through a secured instrument.
Company will deploy A$300mn and US$42mn from released escrow account on Agila transaction to pare debt.
Company has also acquired 100% stake in Vensun Pharma, which has a portfolio of 16 commercialized ANDAs, four of which are partnered with Strides.
Company is also converting its 50:50 JVs with Vivimed to 100% ownership to take control of partnered ANDAs and USFDA approved manufacturing facility. This can start adding potential annualized revenues of $25mn from FY20.
Strides has also acquired 80% stake in Pharmapar Inc to build its Canadian Operations.
Strides Pharma Science Ltd is currently trading at Rs. 513, up by 7.85 points or 1.55% from its previous closing of Rs. 505.15 on the BSE.
The scrip opened at Rs. 500.30 and has touched a high and low of Rs. 542.70 and Rs. 480.65 respectively. So far 78,41,058 (NSE+BSE) shares were traded on the counter. The stock is currently trading below its 50 DMA.
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