Strides Pharma Science tumbles after dismal Q2 performance

Strides Pharma Science slumped 6.88% to Rs 513.15 after the company reported a consolidated net loss of Rs 162.55 crore in Q2 FY22 as against a net profit of Rs 80.94 crore in Q2 FY21.

Revenue from operations during the quarter fell by 9.08% YoY to Rs 721.47 crore.

Total expenses rose by 15.81% to Rs 835.15 crore in the second quarter from Rs 721.12 crore reported in the same period last year, due to higher other expenses (up 31.62% YoY). The company incurred a loss of Rs 12.48 crore on the forex front in Q2 FY22 as against a gain of Rs 4.88 crore earned in Q2 FY21.

The company recorded a pre-tax loss of Rs 174.74 crore in Q2 FY22 as against a pre-tax profit of Rs 68.31 crore in Q2 FY21.

Dr R Ananthanarayanan, managing director & CEO, remarked, "We have reported an operational breakeven in Q2FY22 enabled by a bounce back in other regulated markets, growing 27% QoQ. The performance in other regulated markets was driven by improving demand scenario and resumption of our supplies to partners during the quarter post the COVID related manufacturing disruptions in Q1. Emerging markets continues to track well delivering growth both in Africa and Institutional business.

We continue to face headwinds in our US business. While we have been able to retain volume share on our key products, we continued to witness price challenges in our portfolio during the quarter, magnified by concentration towards acute products.

We have completed the strategic acquisition of Chestnut Ridge site in the US along with a portfolio of approved products which will enable us to accelerate new product launches.

While there are near term headwinds, we remain optimistic on the US business in the long run.

We will start witnessing improvement in our US business starting Q3FY22 and will continue the growth momentum there on. Given the volatile dynamics we believe we will only be able to achieve our current year guided outlook for US in FY23.

A muted sales performance accompanied with a drop in gross margins and relatively higher operating costs has led to a negative operating leverage in H1. While cost measures have been initiated to improve operating leverage, the shift will be visible in the coming quarters.

Strides Pharma Science is a global pharmaceutical company. The company mainly operates in the regulated markets and has an 'in Africa for Africa' strategy along with an institutional business to service donor‐funded markets. The company focusses on difficult to manufacture products that are sold in over 100 countries.

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