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Strides Pharma Science Ltd.’s Q2 FY23 performance fell short of our estimates due to underperformance in regulated markets other than the U.S., which reported strong recovery with a 30% QoQ rise to $60 million.
Revenues grew 24.3% YoY to Rs 9.0 billion (our estimate: Rs 9.4 billion) led by the strong U.S. growth. Institutional business remained soft with closure of contracts (renewals are to begin in FY24).
Higher U..S sales drove operating leverage, supporting the 400 bps QoQ Ebitda margin improvement to 9.4%.
Strides Pharma has reiterated its target of achieving U.S. sales exit run-rate of $250 million in FY23, to be driven by new product launches and incremental sales from the Endo Pharma portfolio.
Growth momentum in the U.S. business and reasonable valuations make the stock attractive.
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