Strides Pharma Science Limited announced its audited financial results for the quarter and financial year ended March 31, 2025, highlighting a strong performance and significant achievements across key metrics.
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For the financial year 2025 (FY25):
- Revenue grew by 17.2%.
- EBITDA reached ₹802.8 crore, exceeding the guidance of ₹750-₹800 crore, marking a 37% growth with an EBITDA margin of 17.6% (252 basis points expansion).
- Reported the highest ever operational PAT, growing almost 12 times from the previous year.
- Operational EPS stood at ₹37.46 per share, a 12x increase, while reported EPS was ₹44.05 per share.
- Net debt to EBITDA improved to 1.9x, surpassing the target of less than 2x.
- Generated operational cash flow of ₹684 crore (85% of reported EBITDA) and free cash flow of ₹230 crore after spending ₹242 crore in capex.
- Net debt reduced by ₹513 crore during the year to ₹1,522 crore.
- Gross debt reduced by ₹619 crore, leading to a 27% improvement in finance costs from Q1 to Q4 FY25.
- Return on Capital Employed (ROCE) grew to 14.9% from a comparable 9.7% (12.8% including demerged Softgel business last year).
- Operating expenses improved to 39% of sales from 40% in the prior year.
- Effective tax rate was 18.7%, in line with the 18-20% estimate.
- The Board approved a dividend of ₹4 per share.
- All outstanding corporate guarantees to Stelis, amounting to ₹705 crore, were closed during the year.
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For the fourth quarter of FY25 (Q4 FY25):
- EBITDA was ₹218 crore, a 22% year-on-year growth, with an EBITDA margin of 18.3%.
- Operational PAT was ₹113 crore, the highest ever quarterly PAT.
- EBITDA to PAT conversion improved significantly to 52%.
- Operational EPS for the quarter was ₹12.27 per share.
- Gross margins were maintained in the 58% to 59% range for the second consecutive quarter post the Softgel business demerger.
- Net debt reduced by ₹49 crore during the quarter.
- Cash-to-cash cycle stood at an industry-leading 117 days.
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Business Segment Highlights:
- U.S. Business: Achieved $291 million in revenue, surpassing the guidance of $275-$290 million, and grew 22%. Received 5 product approvals and launched 7 products, maintaining market share across products. Holds market-leading positions in 36 out of 73 commercialized products. The first nasal spray product, part of the 'beyond $400 million strategy', was filed with the U.S. FDA. The company aims for $400 million in U.S. revenue within two years, leveraging its 150+ uncommercialized ANDAs and the controlled substance opportunity from the acquired Endo plant.
- Other Regulated Markets: Grew by 13.5%, driven by a strong in-licensing portfolio in the U.K. and Nordic markets. Focus remains on expanding product portfolio and new customer acquisitions, with a long-term goal to mirror the U.S. market in absolute size in 4-5 years.
- Growth Markets: Grew strongly by 24.2%, with ongoing focus on regulatory and R&D work for new markets.
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Management Commentary and Outlook:
- Mr. Arun Kumar, Founder and Non-Executive Chairperson, stated that FY25 was a "great year," a "true classic story of Opex leverage," and highlighted the company's highest ever PAT on an operating basis. He emphasized the company's continued focus on opex leverage, higher EBITDA growth, and absolute gross margin growth.
- Mr. Badree Komandur, Managing Director and Group CEO, noted that profitability, efficiency, and growth were the pillars of the company's performance, with all four key metrics beaten.
- Mr. Vikesh Kumar, Group CFO, expressed delight at the strong closing to FY25 with consistent operating performance.
- The company expects to continue its Q-on-Q EBITDA growth. It aims to reduce debt by another ₹1,000 crore over the next 2-2.5 years, targeting a range of ₹300-₹500 crore reduction per year, while maintaining a strong balance sheet.
- Capex outlook for FY26 is expected to be similar to or lower than FY25's ₹242 crore. R&D spend will almost double from last year, with approximately $15 million out of $20 million allocated to the 'Beyond $400 million' strategy, focusing on 505(b)(2) filings. The company expects to file 3-4 such products annually, with the three nasal sprays expected to be commercialized within 12 to 18 months.
- Regarding potential U.S. tariffs, management believes it is irrational for generics to be tariffed but stated that if tariffs are imposed, the costs would be passed on due to the company's non-commodity product portfolio and strong service levels.