Keep an eye on Strides Shasun

The deal will be EPS accretive from the first year and will derive synergies due to the cost savings.

May 10, 2018 03:05 IST India Infoline News Service

Stride Sasun
Strides Shasun yesterday said that the company will be merging its Australia business i.e. Arrow with the generic business of another pharma company Apotex. Post this merger, Arrow/Apotex will become the largest generic drug entity in Australia with ~50% market share.

The distribution arrangements in the Australian pharma market favor large and consolidated players and this merger between Arrow/Apotex is along those arrangements. Post this deal, Strides through Arrow will get two posts Executive Chairman and CFO while Apotex will get CEO’s post.

The deal is likely to deliver synergies from the first year itself and will be positive for Strides Shasun. However, it has to pass the test of clearing regulatory clearance as the entity will hold ~50% market share.

Strides Shasun, post-restructuring has become a B2C business and is likely to see strong improvement in its operating performance. The Arrow/Apotex deal further improves its margin and profitability outlook and we are positive on the stock.

We maintain a buy rating on Strides Shasun with target price Rs855/share. Read our IIFL view. Shares of Strides Shasun rose 3.63% yesterday on the BSE.

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