Strides Pharma hits a fresh 52-week high; stock gains 14% in one week

The company had reported a strong improvement in profitability in Q1 despite Ranitidine suspension in Q4.

Shares of Strides Pharma Science hit a fresh 52-week high of Rs 753, up 6 per cent on the BSE on Tuesday in an otherwise subdued market. In comparison, the S&P BSE Sensex was 0.26 per cent down at 37,882 points at 12:48 pm.

The stock of the pharmaceutical company has rallied 14 per cent in the past one week after its subsidiary, Strides Pharma Global Pte Ltd, received approval from the United States Food and Drug Administration (USFDA) for Butalbital, Acetaminophen, and Caffeine tablets, used to treat tension headache.

The approved product is bioequivalent and therapeutically equivalent to the Reference Listed Drug (RLD), Butalbital, Acetaminophen, and Caffeine tablets of Actavis Laboratories FL Inc, the company said in its press release. 

Quoting IQVIA MAT July 2020 data, Strides Pharma Science said the US market for Butalbital, Acetaminophen, and Caffeine tablets is approximately $40 million.

In the past three months, the stock has rallied 77 per cent after the company reported strong performance across all business segments in the April-June 2020 quarter (Q1FY21) despite significant disruptions and ambiguity in the business environment due to Covid-19. The company delivered healthy operating leverage that led to a 920 basis points sequential EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin expansion with superior cash flows.

Earlier, this month, Strides Pharma Science had announced it was investing in SteriScience Pharma (joint venture between the company and Strides promoter family office), which will be dedicated to the global sterile injectables business.

“Investments in SteriScience and Stelis will increase leverage in the near term; however, both businesses provide medium-term growth visibility. The company reported a strong improvement in profitability in Q1 despite Ranitidine suspension in Q4. Overall, the regulated business (80 per cent of total revenue) has scaled up and provides strong visibility, led by new launches, portfolio expansion and increased market share across its key markets,” analysts at Elara Capital said in event update. The brokerage firm maintains a ‘buy’ rating on the stock with a target price of Rs 775 per share.