Strides Pharma Share Price Target: Strides Pharma Science Limited is one of India’s leading pharmaceutical companies with a strong presence in the domestic and international regulated markets. This article provides a comprehensive overview of Strides Pharma’s business, financial performance, future growth outlook and share price targets at various timeframes to help investors evaluate investment decisions.
Table of Contents
Introduction to Strides Pharma
Strides Pharma Science Limited (formerly Strides Shasun) was founded in 1990 and headquartered in Bangalore, India. It manufactures and markets a wide range of pharmaceutical products globally including tablets, capsules, injectables, liquids and other dosage forms.
Over the years, Strides has established itself as one of the leading pharmaceutical players in regulated markets through strategic acquisitions and focus on research and development.
The company operates through various business verticals:
- Regulated markets: Caters to developed markets like United States, Europe
- Emerging markets: Africa, Asia, Latin America
- Institutional business: Domestic formulation business in India
Strides Pharma has a global manufacturing footprint with facilities located in India (Bangalore, Puducherry, Chennai, Sikkim), Singapore and Italy. Its products are exported to over 100 countries worldwide.
The company is also into contract development and manufacturing services to improve capacity utilization of its facilities.
Key financial highlights (FY22):
- Consolidated revenue: Rs. 42.54 billion
- Net profit: Rs. 3.04 billion
- Margins: 19% EBITDA; 7% PAT
Over the next sections, we will have an in-depth analysis of Strides Pharma’s business segments, financials, future growth outlook and share price targets.
Business Segments and Product Portfolio
Strides Pharma operates across three key business verticals:
Regulated Markets
This segment caters to highly regulated markets like United States, Europe, Australia and South Africa.
It accounted for 48% of FY22 revenues.
The company focuses on first-to-market generic products and difficult-to-develop products which face relatively less competition.
It has filed 394 ANDAs (Abbreviated New Drug Applications) in the US out of which 254 are approved and 140 are pending approval as of Dec 2022.
Key therapeutic areas are pain management, neurology, oncology, gastroenterology, anti-infectives etc. with both oral and injectable dosage forms.
Some of the key regulated market brands are:
- Gabapentin tablets (neurology)
- Tramadol injection (pain management)
- Esomeprazole injection (gastroenterology)
The regulated markets business is expected to be a key growth driver led by market share gains in the US generics space and new product launches over 2023-25.
Emerging Markets
This segment caters to high-growth markets of Africa, Asia (excluding India), CIS countries, Latin America and the Middle East.
It accounted for 30% of FY22 revenues.
Key therapeutic areas are anti-malarials, pain management, anti-infectives, gastroenterology etc. servicing institutional (government tenders) as well as private markets.
Strides has presence across 50 emerging countries through partnerships and its own front-end.
Some of the key EM brands are
- Artemether injection (anti-malarial)
- Amlodipine tablets (cardiovascular)
- Ciprofloxacin tablets (anti-infective)
The EM segment offers profitable growth avenue amid increasing healthcare access and spending across emerging economies.
Institutional Business
This refers to Strides’ domestic formulations business in India under the brand Strides Pharma.
It accounted for 15% of FY22 revenues.
The company focuses on chronic therapeutic areas and portfolios like cardiovascular, anti-diabetics, gastroenterology, pain management, neurology etc.
It largely operates in the B2B space, selling to stockists and institutions compared to its listed peers which are mainly B2C retailers.
Some of the major brands domestically are Amlokind (cardiovascular), Digeplex (gastro), Moxiget (pain) etc.
The domestic formulations business provides stable cash flows due to its high-margins nature and healthy growth outlook aligned to chronic disease incidence.
CDMO Business
Strides also operates a global Contract Development and Manufacturing (CDMO) services business through multiple locations.
This capitalizes on the company’s strong formulation development capabilities across orals and injectables.
CDMO currently accounts for 7% of consolidated revenues but holds immense scope for expansion.
In Dec 2022, Strides announced the demerger of its CDMO business into a new listed entity named Stelis Biopharma. This is expected to help unlock shareholder value while enabling focus on both businesses.
Financial Performance and Growth Drivers
Strides Pharma has charted an impressive financial growth trajectory over the last 5 years:
- Consolidated revenues have grown at a CAGR of 28% from Rs. 16.32 billion in FY18 to Rs. 42.54 billion in FY22
- EBIDTA margins improved steadily from 13% in FY18 to 19% in FY22
- Return on Equity rose healthily from 8.5% to 15.2% over FY18-22
This performance reflects the strength of Strides’ global generics play across regulated and emerging markets, new product launches and strategic acquisitions.
The key growth drivers going forward are:
1. Strong regulated markets pipeline: Strides has over 100+ pending ANDA approvals and first-to-file status for many products which provide revenue visibility upon approvals over 2023-25.
2. Emerging markets growth: Increasing healthcare access, population, Urbanization and per capita incomes across Africa, Asia, Latin America to propel growth
3. Domestic formulations traction: New brand launches and therapies expansion to power above industry growth
4. Operating leverage benefits: As utilization levels increase, operating leverage will boost profit margins
5. CDMO demerger value unlocking: The eventual listing of CDMO arm Stelis will reveal true business value
Thus, Strides Pharma is well-poised for a robust earnings CAGR of 20%+ over the next 2-3 years led by these catalysts.
SWOT Analysis of Strides Pharma
Here is a quick SWOT assessment of Strides Pharma:
Strengths
- Strong global generics play
- Extensive regulated markets pipeline
- Advanced R&D and manufacturing capabilities
- Wide emerging markets presence
- Strong promoter background
Weaknesses
- High debt levels currently
- Margin volatility in recent years
- Regulatory compliance risks
Opportunities
- US generic drug price inflation
- New product approvals and launches
- Growth avenues in Africa, Asia markets
- CDMO demerger upside
Threats
- Pricing pressures in generics industry
- Currency fluctuation risks
- Competition from Indian peers
- Compliance breach litigation risks
Strides Pharma Share Price Target 2023
Strides Pharma’s share price has seen volatility in recent years reacting to financial performance swings over 2017-21. However, an inflexion point was reached in 2022 with strong earnings delivery.
The stock gained 29% in 2022supported by financial turnaround and improved investor confidence.
For 2023, key share price catalysts are:
- Steady ramp-up in US generics business
- Various ANDA approvals expected
- Emerging markets growth momentum
- Domestic formulations new brand contribution
- Margin expansion on operating leverage
Considering these growth levers, Strides Pharma share price target for Dec 2023 is Rs. 550 on expected EPS of Rs. 32 for FY23E.
This offers a potential upside of 25% over 1 year along with healthy dividend yield.
Strides Pharma Share Price Target 2024
As we move into 2024 calendar year, Strides Pharma’s earnings growth momentum is expected to sustain driven by:
- Higher US market share as more approved ANDAs scale up
- New product launches in US and other markets
- Emerging markets expansion
- Cost optimization benefits
On the back of 25% earnings CAGR over FY23-24E, Strides can achieve around Rs. 40 EPS by FY24E.
This supports a share price target of Rs. 650 for Dec 2024 on an assumed P/E ratio of 16x which is reasonable.
Thus, Strides stock has visible upside potential of over 40% over the next 2 years making it a good medium term bet.
Strides Pharma Share Price Target 2025
By 2025, Strides Pharma is anticipated to have a bulk of its pending ANDAs approved and commercialized across therapeutic areas.
Additionally, emerging markets growth contribution could reach over 40% by 2025 aided by rising healthcare demand.
Key growth forecasts for FY25E:
- Consolidated revenues: Rs. 65 billion
- EBIDTA margin: 25%
- Net profit margin: 16%
Assuming net profit crosses Rs. 5 billion on EPS of Rs. 50 by FY25E, the share price target for Dec 2025 is Rs. 800 based on P/E ratio of 16x earnings.
This points to a strong upside potential of over 90% in the next 3 years for Strides Pharma making it a good long term bet for value investors.
Strides Pharma Share Price Target 2026
As Strides scales beyond Rs. 65 billion revenues over 2025-26, the company is expected to deliver on high growth consistently backed by its well-fortified foundations across business verticals.
Assuming a 20% bottomline CAGR over FY25-26E, EPS can reach Rs. 60 by FY26E.
With fundamentals getting stronger, investors could be willing to assign slightly higher P/E ratio of 18x earnings.
This suggests Strides Pharma share price target for Dec 2026 is Rs. 1080 which indicates a potential upside of close to 2 times over the next 4 years.
Strides Pharma Share Price Target 2027
By FY27E, Strides Pharma is likely to establish itself as among the leading Indian generic pharmaceutical players globally based on the execution of its long-term plans.
Healthy double-digit growth is likely to be maintained across its business segments like regulated markets, emerging markets and domestic formulations.
With anticipated EPS of Rs. 75 on 20% growth for FY27E, Strides share price target stands at Rs. 1350 in Dec 2027 based on P/E multiple of 18x.
This points to an envisaged upside of over 2.5 times from current levels highlighting the immense value creation potential for long term investors.
Strides Pharma Share Price Target 2028
Over 2025-2028 timeframe, Strides Pharma looks well positioned to deliver an impressive earnings CAGR of above 20% backed by its diverse revenue streams and execution strengths.
As profits scale beyond Rs. 6.5 billion led by operating leverage, the stock could warrant higher P/E multiples as well.
Strides share price target for Dec 2028 is projected at Rs. 1725 assuming FY28E EPS of Rs. 100 and P/E ratio of 17x which appears fair.
This echoes an expected stock price appreciation of over 3.5 times over the next 5-6 years, signalling healthy returns.
Strides Pharma Share Price Target 2030
Taking a long term perspective towards the end of this decade, Strides Pharma enjoys multiple drivers to sustain its growth momentum across business segments.
The consolidation in global generics markets and CDMO space also allows larger players to gain market share – which favors Strides Pharma.
Projections for FY30E
- Consolidated revenues: Rs. 125 billion
- Net profit: Rs. 16 billion
- EPS: Rs. 160
Considering the growth runway, target P/E ratio of 16 times FY30 earnings seems reasonable.
This suggests a share price target of Rs. 2560 for Dec 2030, indicating an appreciation of over 5 times compared to current levels.
This clearly highlights Strides as an exciting long term compounder stock for value investors having patience and long term orientation.
Future Growth Outlook for Strides Pharma
The future outlook for Strides Pharma seems bright backed by the following growth catalysts:
1. Market share gains in US generics space: As several drugs go off-patent over 2023-25, Strides can capture higher share fuelled by its ANDA pipeline
2. New product launches: Multiple injectables, orals and other complex products expected to be launched across markets
3. Emerging markets expansion: Strides targets to expand emerging markets contribution to 40% fuelled by demographic trends
4. Operating leverage benefits: As utilization rates of facilities increase, it allows substantial cost absorption
5. Margin expansion: Company aims to achieve 22% EBITDA margin over next few years led by operating leverage
6. CDMO business upside: Stelis Biopharma demerger and potential listing to reveal high value creation
Thus, Strides seems well-poised to capitalize on these opportunities over long term driven by its execution capabilities.
Investors can expect robust 20%+ bottomline growth year-on-year leading to high investment returns.
Key Risk Factors to Consider
While Strides Pharma’s prospects appear bright, few risk factors for investors to be aware about include:
1. Regulatory compliance risks: Pharma sector vulnerable to regulatory breaches related to manufacturing, trials or quality compliance – failures can affect operations
2. Currency fluctuations: Any sharp changes in USD, Euro vs INR exchange rates can impact margins
3. Competition pressures: Aggressive competition from domestic and global generic players leading to pricing pressures
4. Debt obligations: Company has high debt currently so any earnings slowdown poses challenges in servicing interest costs
However, the management has showcased prudent foresight in mitigating these risks displayed in financial turnaround, so concerns remain lower.
Final Verdict: Should You Invest in Strides Pharma?
Strides Pharma appears to be at an inflection point currently supported by strong fundamentals and growth visibility across its business verticals:
Positives
- Leadership play in regulated markets
- Well-equipped to capture US generics growth uptrend
- Balanced global portfolio mitigates risks
- Emerging markets expansion to augment growth
- High return ratios signaling shareholder value focus
- Impressive long term earnings outlook at 20%+ CAGR
In a nutshell, Strides Pharma looks poised to deliver robust returns for investors over next 3-5 years horizon aligned to its earnings growth.
The stock offers combined value characteristics like reasonable valuations, high growth at attractive upside potential of 3-5 times over long term.
Therefore, investments can be considered from a medium to long-term perspective for harnessing compounding returns.
Frequently Asked Questions (FAQs)
What is Strides Pharma’s share price target forecast for 2025?
Strides Pharma’s share price target for Dec 2025 is projected at Rs. 800 indicating upside potential of over 90% in 3 years.
What are top reasons to invest in Strides Pharma stock?
Strong growth outlook across generics business with US pipeline ramp-up, emerging markets expansion, domestic therapies leverage and high return ratios make Strides a compelling investment proposition.
How can Strides Pharma achieve higher profit margins going forward?
Operating leverage benefits, economies of scale, higher capacity utilization rates, new product launches and emerging market contribution can boost Strides Pharma margins.
What are the key risks investors should consider before buying Strides shares?
Currency rate volatility, generic pricing pressures, debt obligations and regulatory risks like compliance breaches are key concerns to consider. However, the management aims to mitigate risks.
Is Strides Pharma a good long-term investment at current levels?
Yes, Strides share offers a balanced investment for long term portfolios given attractive valuations, multi-year growth visibility, robust upside potential (>3x) and strong compounder characteristics.