Summary
Strides Pharma Science Limited - Q3 FY26 Earnings Call Summary Friday, January 30, 2026, 6:00 PM IST
Event Participants
Executives 4 Aditya Kumar (Executive Director), Badree Komandur (MD & Group CEO), Vikesh Kumar (Group CFO), Abhishek Singhal (Investor Relations Consultant)
Analysts 8 Anand (Soar Wealth), Chirag Shah (White Pine Investment Management), Krisha (Individual Investor), Mehul (40 Cents), Nirmam Mehta (Unique PMS), Nitin Agarwal (DAM Capital), Omkar (Individual Investor), Rupesh (Longequity Partners), Sameer (Sakman Capital), Saumya (Individual Investor)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹1,192 crores | +3.6% YoY; Growth was muted by the institutional business. Excluding institutional, growth was ~9%. |
| Gross Margin | 60.1% | +240 bps YoY; Aided by better business mix and scale-down of low-margin institutional business. |
| EBITDA | ₹236 crores | +12% YoY; Highest ever quarterly EBITDA. Margin expanded 160 bps to 19.8%. |
| Operational PAT | ₹128 crores | +38.6% YoY; 9M FY26 PAT has already exceeded full-year FY25 levels. |
| Operational EPS | ₹13.9 | +39% YoY; Reflects stronger conversion of EBITDA to PAT (currently at 54%). |
| Net Debt | ₹1,436 crores | -₹169.6 crores (Constant Currency); Impacted by ₹83 crore forex restatement. Debt/EBITDA improved to 1.59x. |
| ROCE | 15.8% | +330 bps from FY25; Driven by improved profitability and efficient cash-to-cash cycle management. |
| Cash-to-Cash Cycle | 124 days | Stable; Marginal increase due to higher mix of Ex-U.S. business which has longer cycles than institutional sales. |
Geographic & Segment Commentary
- U.S. Market: Revenue stood at $70 million, largely flat YoY. Performance was impacted by a delayed flu season, slower-than-expected quota allocations for controlled substances, and the strategic discontinuation of 8 low-profitability products. Management reiterated a long-term revenue aspiration of $400 million by FY28, supported by R&D programs and controlled substance ramp-up.
- Other Regulated Markets (ORM): Revenue reached $48 million, growing 21% YoY. This segment broke its historical $40-43 million range due to strong B2B partnerships in Australia and Europe. Growth is driven by high-entry barriers, predictable pricing, and structural shifts in the geographical engine.
- Growth Markets: Delivered $16.6 million in revenue, representing 19% YoY growth. Management is seeing “green shoots” supported by a rising cadence of regulatory filings and execution in new territories.
- Institutional Business: Revenue remained muted as global donor funding (e.g., Global Fund) has been reduced or delayed. This segment is being intentionally scaled down due to its low-margin profile, though it remains lean on working capital.
Company-Specific & Strategic Commentary
- Geographical Diversification: The gap between U.S. and Ex-U.S. revenues narrowed to just ₹50 crores this quarter. Ex-U.S. now contributes 47% of total revenue, reflecting a strategic move to mirror U.S. scale in other geographies by FY27-28.
- Controlled Substances & Complex Portfolios: Management is investing in nasal sprays (one filed, two more by June 2026) and 505(b)(2) programs. The controlled substances business is building a one-year track record required for higher quota allocations from the DEA.
- Leadership Changes: Peter Hardwick joined as CEO of North American Business to drive the $400M+ growth strategy. Nandini Matiyani was appointed as Executive VP of HR to lead global people strategy and workforce capability building.
- ESG Advancement: The company’s ESG score improved from 75 to 80, reflecting enhanced governance and compliance practices.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| U.S. Revenue | $400 million by FY28 | To be driven by relaunch of dormant products, controlled substances, and new R&D programs. |
| Gross Margin | 58% - 60% (Sustainable) | Expected range assuming current business mix and COGS optimization. |
| Tax Rate | 15% - 20% | Effective tax rate for FY26 and beyond. |
| Maintenance Capex | ₹100 - ₹125 crores | Ongoing requirement; Growth capex (IP/Product rights) will be opportunistic. |
Risks & Constraints
| Risk | Context |
|---|---|
| Seasonal Volatility | The U.S. business is sensitive to flu season timing; Q3 FY26 saw a delay which muted growth expectations. |
| Regulatory (Quotas) | Growth in controlled substances is dependent on government-allocated quotas, which require a proven manufacturing track record. |
| Currency Risk | Significant portion of debt is in foreign currency; ₹83 crore negative impact on debt figures this quarter due to rupee depreciation. |
| Pricing Erosion | Standard generic pricing pressure continues; Management mitigates this through portfolio diversification and COGS improvement. |
Q&A Highlights
U.S. Growth & $400M Target
- Question: What drives the jump from $70M to $100M/quarter needed for the FY28 target? (Rupesh)
- Answer: Growth will come from a combination of launching 60+ products over three years, scaling controlled substances once quotas normalize, and R&D programs delivering revenue in 12-18 months (Badree).
Managed Product Discontinuations
- Question: Why were 8 products discontinued and what was their revenue contribution? (Anand)
- Answer: The revenue was not material; the decision was purely based on a strict profitability threshold. Strides maintains a market-leading position in 37 of its 68 active products (Badree).
Other Regulated Markets (ORM) Sustainability
- Question: Is the $48M ORM run rate sustainable or a one-off? (Sarvesh Gupta)
- Answer: The “build phase” in ORM is over. Investments in regulatory strategy and B2B partnerships over the last two years are now converting into high-quality, sticky revenue (Badree).
Complex Portfolio (Nasal Sprays)
- Question: What is the status of the nasal spray portfolio? (Sameer)
- Answer: One product is under FDA review; two more will be filed by June 2026. Revenue is expected to start contributing significantly in FY27-FY28 (Badree).
Key Takeaway
Strides Pharma delivered a resilient Q3 FY26, characterized by an all-time high quarterly EBITDA of ₹236 crores and a notable shift in geographic mix. While U.S. revenue remained flat at $70 million due to a delayed flu season and quota constraints, the Ex-U.S. business (ORM and Growth Markets) grew 20% YoY to $64 million, nearly mirroring the U.S. scale. Profitability metrics improved significantly, with gross margins crossing 60% as the company pivoted away from low-margin institutional sales. Management remains committed to its “FY28 $400 million U.S. revenue” target, supported by a specialized complex portfolio including controlled substances and nasal sprays. Despite a ₹83 crore forex-led increase in reported debt, the leverage ratio improved to 1.59x EBITDA. The company is transitioning from a U.S.-centric model to a diversified global generics player with structurally enhanced margins.
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