- Strides has achieved significant improvements, including the highest EBITDA, debt reduction, and gross margin improvements.
- Strides is confident in its EBITDA outlook of INR 700 crores to INR 750 crores and debt reduction to under 3 in FY24.
- All technologies and high-end CDMO businesses are now under the new platform, OneSource.
- The soft gelatin business, historically embedded in Strides, has been moved to OneSource, positioning Strides as India's first specialty pharma CDMO.
- Complex injectables, previously part of Agila, are now part of the CDMO business.
- Stelis has been reset and is performing well, with 15 unique customers in the biologics business.
- Strides is not involved in API CDMO or plain oral dosage forms.
- Strides signed a binding term sheet to sell its third plant to Syngene for 705 crores, with the transaction expected to complete in Q3.
- Shareholders will benefit from the value unlock, and the promoter's shareholding will increase from 30% to 39%.
- The NCLT process for the transaction is expected to be completed in approximately 12 to 15 months.
- Strides expects revenues to reach INR 4,000 crores in FY25 with EBITDA not less than INR 700 crores to INR 750 crores.
- The company is confident about its future growth, especially in drug-device combinations and biologics.
- OneSource aims to become a leading specialty CDMO with strong capabilities and growth potential.
- GLP-1 contracts are signed for all three products, and Strides is well-positioned to benefit as they come off patents.
- Biologics business will see growth as CSA agreements mature, doubling the business in three to four years.
- The opex leverage will increase in the biologics business, leading to higher EBITDA.
- Valuations for soft gelatin and Steriscience are at around 17x FY24 EBITDA.
- The merger into OneSource is a clean 100% demerger.
- Strides Pharma Science plans to separate into two separate listed companies: Strides (the existing company) and OneSource (the new entity).
- The assumption is that once the separation is complete, there will be no guarantees from Strides towards Stelis (part of OneSource).
- The valuation of Steriscience for the merger is INR 2,195 crores.
- Strides aims to grow OneSource's business to $180 million-$200 million by FY '25 with a 30% margin, and it doesn't foresee significant capital investments for this growth.
- The working capital requirement for OneSource's CDMO business is expected to be manageable, with a debt to EBITDA ratio of around 2.25x in FY '25.
- OneSource's capital needs in the near term are not significant, and any expansion plans are likely to be funded by free cash generation.
- Strides expects to recoup the revenue and EBITDA it loses to OneSource in FY '25 and anticipates historical growth beyond that, focused on bottom line growth and gross margin expansion.
- The debt to EBITDA ratio is expected to be comfortable after the restructuring, and Strides is working to reduce its debt with improved working capital cycles and free cash generation.
- There are no plans for a stock buyback program.
- Strides has a strong pipeline in soft gels, injectables, and biologics. In biologics, they focus on CMO/CDMO services. Soft gelatin has a robust pipeline, including controlled substances and oncology products. Steriscience has a legacy business with approved products and plans for capacity expansion.
- Strides' current business is a combination of B2B and B2C, and it will continue to partner for some products even after the restructuring. They often have a significant market share due to their partnership model.
- The expansion of soft gelatin capacity from 800 million to 2.2 billion units is underway and includes Rx and OTC products, broadening their market presence.