STARNSEQ2FY26November 5, 2025

Strides Pharma Science Limited

8,393words

108turns

13analyst exchanges

2executives

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Management on call

Badree Komandur

MANAGING DIRECTOR AND GROUP CHIEF EXECUTIVE OFFICER

Vikesh Kumar

GROUP CHIEF FINANCIAL OFFICER INVESTOR RELATIONS CONSULTANT

Key numbers — 40 extracted

4.6%

to be answered. So from our perspective, the Q2 has been very strong for us. Our revenue grew by 4.6% year- on-year. Gross margins at 14.6% growth. EBITDA grew by 25.4% and operational PAT at 84%. A

14.6%

tive, the Q2 has been very strong for us. Our revenue grew by 4.6% year- on-year. Gross margins at 14.6% growth. EBITDA grew by 25.4% and operational PAT at 84%. All we want to say is that consistency a

25.4%

rong for us. Our revenue grew by 4.6% year- on-year. Gross margins at 14.6% growth. EBITDA grew by 25.4% and operational PAT at 84%. All we want to say is that consistency and sustainable growth has hel

84%

by 4.6% year- on-year. Gross margins at 14.6% growth. EBITDA grew by 25.4% and operational PAT at 84%. All we want to say is that consistency and sustainable growth has helped us to create the oper

ffect is very clearly seen from our results, a 4.6% increase in revenue growth resulted in almost 3x increase in gross margin growth, almost 5x to 6x increase in the EBITDA growth, and almost 20x in

, a 4.6% increase in revenue growth resulted in almost 3x increase in gross margin growth, almost 5x to 6x increase in the EBITDA growth, and almost 20x increase in the operational PAT. This is base

6% increase in revenue growth resulted in almost 3x increase in gross margin growth, almost 5x to 6x increase in the EBITDA growth, and almost 20x increase in the operational PAT. This is based on

20x

ost 3x increase in gross margin growth, almost 5x to 6x increase in the EBITDA growth, and almost 20x increase in the operational PAT. This is based on the quarterly performance. As far as the half

5.5%

he quarterly performance. As far as the half-yearly performance is concerned, the revenue grew by 5.5%, gross margin at 13.2% and EBITDA at 20% growth for the first half and operational PAT at 82.6%.

13.2%

. As far as the half-yearly performance is concerned, the revenue grew by 5.5%, gross margin at 13.2% and EBITDA at 20% growth for the first half and operational PAT at 82.6%. Again, the complete ope

20%

lf-yearly performance is concerned, the revenue grew by 5.5%, gross margin at 13.2% and EBITDA at 20% growth for the first half and operational PAT at 82.6%. Again, the complete operating leverage is

82.6%

by 5.5%, gross margin at 13.2% and EBITDA at 20% growth for the first half and operational PAT at 82.6%. Again, the complete operating leverage is visible in the entire P&L. I'll go market by market

Guidance — 20 items

Abhishek Singhal

opening

“The transcript for this call will be available in a week's time on the company's website.”

Vikesh Kumar

opening

“We expect our gross finance costs to continue to improve, while the net finance cost for H2 may slightly go up due to the income that we've had in H1.”

Vikesh Kumar

opening

“Our ETR for Q2 and for H1 has been around 15%, and we expect it to be in the range of 15% to 20% for the year.”

Vikesh Kumar

opening

“We hope to continue and sustain this momentum as we focus on our growth levers for the future.”

Vikesh Kumar

“And now we've stepped up to that $44 million range, and we expect to remain there.”

Akash Jain

“So I'm just trying to understand -- and in the light of the fact that you have said that the target for doubling U.S.”

Akash Jain

“revenue sorry, the target for revenue growth in U.S.”

Badree Komandur

“We have already filed for the one product, and we expect to file a few more in the next 12 months.”

Amresh Kumar

“So do we foresee some more debt reduction going forward and some reduction in further finance cost -- gross finance cost?”

Vikesh Kumar

“So we expect finance costs to come down.”

Risks & concerns — 6 flagged

As you know, the other regulated markets are difficult to operate.

— Badree Komandur

So all of this -- and this will be a very good investment year, where we understand the entire various legs of the Control Substances, and we should see the full impact of that in the next year.

— Badree Komandur

Let me ask you other way, what is the risk to those numbers?

— Rupesh Tatiya

So last quarter, we had called out some intense pricing pressure in U.K.

— Pratik Kothari

So now that we have seen 1 month post tariff in the quarter gone by, and 1 month in this quarter, how do you -- if you can throw some color on the impact of the tariffs that we are seeing on our business?

— Sarvesh Gupta

What I spoke about was the impact of restatement of foreign currency debt.

— Vikesh Kumar

Q&A — 13 exchanges

Sir, my question is with respect to other regulated market. It has been strong this quarter. What are the key drivers to make this growth sustainable? Is it fair to assume that other regulated markets should grow faster than U.S. going forward? These are the questions relating to other regulated markets?

Badree Komandur

Yes. So as far as the other regulated markets, I'll put it like this, like one is in terms of rest of the world markets, you have to look at it as a bucket, other regulated markets plus the growth markets, minus the access markets. If you really see this quarter, we have reached an important threshold of INR10.3 billion, that's INR1,000 crores we crossed this in this market. And if you really see the last -- the trajectory of the last six quarters, this market has been forming in various geographies. And this is the first time we have just broken that trend. And we believe that this is very su

I think it has been extremely positive surprise on margins. And I think the management team should get full accolades for that. I just want to also understand a little bit on, is there an interplay between margins and revenue growth? I think a little bit of that you referred to earlier. But for example, are we following or are we stopping some -- reducing some revenues to improve profitability? Just to understand a little bit on are we -- is some of this margin also come at the cost of revenue because the margins look great, but revenue has been obviously lower than what we had expected and wh

Vikesh Kumar

Yes. So I will take this. So if you look at the EBITDA, while the margin has been healthy, even the absolute growth in EBITDA and profits has been healthier, and which is where you also see the multiplier effect right at EBITDA and at PAT. So the focus is both on absolute profit growth and margin growth. So what we are saying we want to take in revenues that either meet our strategic margin thresholds in terms of profitability or they should help our under recoveries, which helps in improving our operating leverage. And that philosophy has played out. So it is just that we don't want to do los

Sir, congratulations on a very strong set of numbers. So the first question would be on our Beyond Generics. So we had launched our Nasal Spray. Is there any update on that in this quarter? And second question...

Badree Komandur

Yes. We have already filed for the one product, and we expect to file a few more in the next 12 months. The second question is on the balance sheet. So it was heartening to see that the debt coming down with the free cash flow this first half. So do we foresee some more debt reduction going forward and some reduction in further finance cost -- gross finance cost? We will continue to focus on profitability and efficiency. So we expect finance costs to come down. And from a free cash generation, whatever free cash we generate, our aim will be to reduce debt. And sir, then deliberating on the sam

On capex intensity, it has increased to INR149 crores in H1 FY '26. Could you highlight the major areas of investment? And what will be our incremental spend in H2 FY '26 and FY '27?

Vikesh Kumar

So I already touched upon the capex spends. It has gone towards maintenance capex, as well as for future growth, so including certain investments for intangibles that we have done. And we expect to maintain it at similar levels for H2.

Congrats on fantastic set of numbers. I have a few questions. First question, Vikesh, reported PAT is INR131 crores. Operational PAT, you said in presentation is INR140 crores. So can you give some reconciliation maybe line by line? And also the INR71 crores adverse currency impact, what portion of that is routed through P&L?

Vikesh Kumar

So on the first part, the difference between the operational PAT and reported PAT is just the exceptional items. So these are expenses related to past events and -- that are incurred in the quarter, and are not relating to the performance for the quarter. So that is the exceptional loss. So it's just one item that's a reconciliation item. So these are like one-offs, basically? Yes, these are one-offs. This INR71 crores, what has profit... In terms of the INR71 crores, so that is the balance sheet position as of the date. So if you look at the average rate versus the closing rate, the closing r

Yes. Just a one -- it's a very simple question. I'm sorry. It's just a very simple question. Badree, so historically, H2 has been better than H1. So nothing changes this year as well, right?

Badree Komandur

Yes, you got it correct.

Sir, one question on competition. So last quarter, we had called out some intense pricing pressure in U.K. Again, this quarter, we are talking about -- I mean, in the presentation, we have spoken about U.S. We have, I think, discontinued five, six products in first half. Just across 2 markets, anything to read into it, how to look at -- I mean, is this just one-off some products coming in? Is this -- I mean, some intense increased competition that we saw 3, 4 years back? Some color, please?

Badree Komandur

Pratik, just to give you a clarity on this. See, the competition is something which no company has got control of, right? So from our perspective, at the end of the day, you have to look at it as a portfolio. Some you will gain, some you will lose, right? So from that perspective, if you really see the -- there is definitely some competition in the marketplace. And what is more important for us to focus is that how we are ahead of the competition. That's what the company is working on. But the most important thing is we don't want to compromise the profitability of the company at the cost of t

Badree, congratulations, on our team for a very good performance. Just one question on the R&D. Now R&D, the $15 million, $20 million that we're looking to spend, are there any particular areas that you're going to be focusing on more, that you can highlight?

Badree Komandur

So we have said that we'll be focusing on Nasal Sprays and the Beyond Generics. And there are certain specific domains we have identified, Nitin. It's early days, but we are committed to focus on that. But Nasal Sprays is one thing, something which we need to call out at this point of time. Secondly, Vikesh, on the capex. So this year is about INR300 crores or thereabouts. Is this a run rate we should work with on these future years also? Our maintenance capex is going to be between the INR100 crores to INR150 crores. And the rest is more -- it is more quarterly driven, rather than being a tre

It is fairly structural. I mean if you look at the last 6 quarters, we've been in that range and expanding in a very calibrated manner. So H1 FY '25, we were at 55%. H1 FY '26, we are at 59%. Q3, Q4 of last year, we were at 58%. And so it is in line, and it has got to do with the discipline that we follow across markets in terms of how we onboard new businesses. Siddharth Bhattacharya: The second question I had is that H1 to H1, if I look at numbers, your gross margin increase has not really translated into corresponding EBITDA increase, which tells me that there is some variable cost that has

Badree Komandur

Yes. So if you see Q1 of last year, the expenses were significantly lower, the revenue was lower. And from Q2 onwards, and that is where the year-on-year difference you're able to see much more starker. But when you look at Q3, Q4, the last 4 quarters, it has been fairly in a very steady range.

Congrats on a steady set of numbers. So first question is on the tariffs. So now that we have seen 1 month post tariff in the quarter gone by, and 1 month in this quarter, how do you -- if you can throw some color on the impact of the tariffs that we are seeing on our business?

Badree Komandur

Currently, there is no impact, and we continue to watch the external developments and things are changing every day, but at least some clarity has come in that the tariff is not going to be there in the near term. But it's as good as news every day, right? So we have to watch out. So far, there has been no impact for us for generics pharmaceuticals. You said that the other regulated market business would mirror U.S. business. So now the U.S. business itself on a quarterly run rate can grow to maybe $100 million in another 2, 3 years. So do we mean that the other regulated business will also re

Congratulations, sir, on a very good set of numbers. A couple of questions. One, sir, we are talking about $400 million in U.S., maybe $200 million, $220 million just in ORM, ORM plus growth market is $400 million. So I'm thinking ORM will be somewhere around $200 million, $250 million. So again, not asking for a quarter-to-quarter, but at least from a run rate perspective, we should at least start hitting $80 million, $85 million, $90 million in U.S. and probably $50 million in other regulated markets. Do you see this happening in FY '27? Again, not for a particular quarter, but at least some

Badree Komandur

Yes. So just to reiterate, right, this is an aspirational goal, right? And we are starting to see growth. And all we are saying is that the last 6 quarters of market formation has resulted in a growth for the rest of the world markets, excluding access markets. And we believe that if you are able to grow in the same trajectory, we should be able to mirror that market in the next 2 years. And that's what we are expeditiously working on. And you will see that the narrowing as we go along from quarter-to-quarter between U.S. and the rest of the world markets, which includes both the other regulat

Thanks for this opportunity and congrats for good set of numbers. Sir, three questions. First question is on currency. So what is our average hedge duration? When will we see this benefit of stark INR depreciation in P&L? That's one. Second, on this intangible or ANDAs that you have, if you can give more color on that in terms of number or what kind of opportunity size it will target if everything plays to the playbook. Third was on the U.S. competition, in general competition that we see. If you can just give us a color how should one look at it, simply because we all have a refresh memory of

Vikesh Kumar

Yes. Thanks, Chirag. Chirag, on the currency, I did not follow your question. I will repeat it. I'm saying you indicated a reasonable amount of hedge loss -- accounting hedge loss, when I say hedge loss, given the currency inventory. So how -- what is the duration of our current hedges, outstanding hedges and from when can we see the benefit of current INR rates, for example? So we are seeing the benefit of the current INR rates. You should also appreciate that we have a large part of our operations outside of India, where there are costs that are in USD. But largely, the way we really focus o

Thank you, everyone. And wish you a very happy weekend. And all we are saying is that we'll continue to focus on long-term sustainable business with EPS accretion. Thank you.

Vikesh Kumar

Thank you.

Speaking time

Badree Komandur

Vikesh Kumar

Moderator

Rupesh Tatiya

Sarvesh Gupta

Anand Mundra

Chirag Shah

Amresh Kumar

Pratik Kothari

Nitin Agarwal

Opening remarks

Abhishek Singhal

Very good evening, and thank you for joining us today for Strides earnings call for the second quarter and half year ended financial year 2026. Today, we have with us Badree Komandur, Managing Director and Group CEO; Aditya Kumar, Executive Director and Vikesh Kumar, Group CFO to share the highlights of the business and financials for the quarter. I hope you've gone through our results release and the quarterly investor presentation that have been uploaded on our website as well as stock exchange website. The transcript for this call will be available in a week's time on the company's website. Please note that today's discussion may be forward-looking in nature and must be viewed in relation to the risks pertaining to our business. After the end of this call, in case you have any further questions, please feel free to reach out to the Investor Relations team. I now hand over the call to Mr. Badree to make his opening comments.

Badree Komandur

Thank you, Abhishek. Good morning, good afternoon, and good evening to all who are joining in this call. We are extremely happy with the results. The performance demonstrates our consistent execution as we invest in sustainable long-term growth. I'll cover my speech into two parts. I'll focus on all the growth metrics on the business. Our Group CFO, Vikesh will cover all the metrics relating to the efficiency as well as the profitability. I also will speak about some qualitative aspects of the key businesses which we have. And in the end, we'll take all the questions that has to be answered. So from our perspective, the Q2 has been very strong for us. Our revenue grew by 4.6% year- on-year. Gross margins at 14.6% growth. EBITDA grew by 25.4% and operational PAT at 84%. All we want to say is that consistency and sustainable growth has helped us to create the operating leverage, and the multiplier effect is very clearly seen from our results, a 4.6% increase in revenue growth resulted in

Vikesh Kumar

Thank you, Badree. Good morning, good afternoon, and good evening to all of you. As Badree mentioned, it's very pleasing to report yet another strong quarterly performance. Our performance has been exceptional across metrics of profitability, efficiency and growth. I will start with the profitability metrics. First, I'll focus on the gross margins. Our gross margins for the quarter are at INR706 crores. It's an INR90 crores increase from what we reported in Q2 of FY '25, with a gross margin percentage of 57.8%. It's a 500 basis points improvement from our gross margins last year. For H1, our gross margins are at INR1,381 crores, with a gross margin percentage of 59%. So even for H1, our gross margins have improved by 410 basis points over H1 of last year. Coming to EBITDA. We are reporting a very strong EBITDA of INR232 crores for the quarter with EBITDA margin of 19%. As Badree already mentioned, it's a 25% EBITDA growth year- on-year. And for H1, we are reporting INR450 crores EBITDA

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