Strides Pharma Science reported a record Q2 FY27 performance with revenue at ₹1,430 crore, up 17% YoY. The ex-US business emerged as a key growth driver, surging 31% to contribute nearly half of total revenue. While the US market growth remains steady, higher logistics costs and inventory build-up impacted margins and debt ratios. The company remains confident in a stronger H2, bolstered by new product launches and stabilizing supply chains.
Strides Pharma Q2 FY27 Financial Update
Revenue at ₹1,430 Crore and Operational PAT at ₹135.8 Crore.
Reader Takeaway: Strong ex-US revenue growth provides resilience, though elevated inventory and logistics costs create short-term pressure on margins.
What just happened
Strides Pharma Science posted a robust performance for Q2 FY27, with revenue growing 17% year-on-year to ₹1,429.7 crore. Operational PAT rose 12% to ₹135.8 crore, supported by a 31% growth in ex-US markets. The company successfully appointed Biren Gabhawala as an Independent Director.
Why this matters
The company has achieved its FY28 revenue mix goal ahead of schedule, with non-US markets now accounting for 49% of total income. This diversification reduces reliance on the US market, which is experiencing a "measured pace" of growth due to the normalization of past drug shortages and increased logistics costs.
Financial Health
EBITDA stood at ₹250.9 crore, representing an 8% increase but with margins tightening to 17.6% due to freight costs and raw material price fluctuations. Net debt-to-EBITDA climbed to 1.72x, largely driven by a strategic ₹174 crore inventory buildup intended to hedge against geopolitical supply chain risks.
Business and Operational Update
Strides launched three new products during the quarter, expanding its commercial portfolio to 75. The company continues to advance its controlled substances segment at its Chestnut Ridge facility. Management anticipates H2 to outperform H1 as cost pressures ease and new product launches contribute to revenue.
Risks to watch
Investors should closely monitor the net debt-to-EBITDA ratio and cash conversion cycles. While management expects these to improve by fiscal year-end as inventory levels normalize, any failure to reduce these metrics could weigh on sentiment. Additionally, competition and price erosion in the US market remain persistent risks.
What to track next
The status of the Sandoz deal, which is awaiting antitrust clearance in specific jurisdictions, is expected to be resolved in Q3. Furthermore, keep an eye on the contribution of new product launches scheduled for the second half of the year.