Strides Arcolab Ltd's Q3FY19 consolidated net profit declines 38.09% yoy to Rs30.83cr : In-line with Estimates

The company’s consolidated revenue stood at Rs794.50cr, up 6.07% yoy and 8.44% qoq.

Jan 29, 2019 07:01 IST India Infoline Research Team

Strides Arcolab Ltd Q3FY19

Consolidated Results Q3FY19: (Rs. in cr)

Q3FY19 YoY (%)
Revenue 794.50 6.1
EBITDA 127.09 3.4
EBITDA Margin (%) 16 [40]
Net Profit (adjusted) 30.83 [38.1]
***EBITDA margin change is bps

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.

Other highlights
  • 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.
  • Net debt stood at Rs1824.1cr by end of Q3FY19.



Technical View:

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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