Amansa Holding buys 11,40,301 shares of small-cap multibagger pharma stock; company reduces debt and presents special situation opportunity!

Moreover, the company's announcement regarding the creation of OneSource in September 2023 marks a pivotal value enhancement opportunity for Strides shareholders

Throughout the tumultuous fluctuations witnessed by the Indian benchmark indices over the past week, the Nifty Pharma index defied the volatility, securing gains of 3.59 per cent and emerging as one of the standout sectoral performers. Among the pharmaceutical stocks poised to capture attention in the coming week is Strides Pharma Science Ltd, a Small-Cap entity. Established in 1990, Strides Pharma Science Limited has evolved into a medium-sized pharmaceutical company specializing in the development, manufacturing, and exportation of a diverse array of pharmaceutical products. Over the years, the company has pursued both organic and inorganic growth strategies, facilitating its expansion into new markets and the diversification of its business portfolio across various therapy segments and manufacturing infrastructures.

Distinguished by its comprehensive product range encompassing soft gel capsules, tablets, capsules, and semi-solids, Strides Pharma Science Limited operates across regulated market formulations, emerging markets primarily in Africa, and institutional segments focused on tender-driven business, predominantly in developing markets. Notably, Strides ranks among the top 10 players serving the US markets, a feat attributed to its distinctive approach to product launches, pricing discipline, and margin preservation, setting it apart from other generic pharmaceutical players. Bolstered by approved manufacturing facilities and substantial investments in research and development, Strides anticipates a robust pipeline of over 50 products, propelling it toward achieving a USD 400 million target for its US business within the next three years.

Of significant note is the remarkable reduction in the company's debt-to-EBITDA ratio, which has undergone a substantial decline from 5.7x in FY'22 to 2.8x on an annualized quarterly basis, signaling a notable financial transformation. Despite surpassing guidance in debt reduction, the company continues to generate free cash flow, financing all capital expenditure growth and incremental revenue expansion of 17 per cent without amplifying its debt profile, underscoring its steadfast commitment to enhancing business quality, operational leverage, and efficient capital utilization.

Moreover, the company's announcement regarding the creation of OneSource in September 2023 marks a pivotal value enhancement opportunity for Strides shareholders. OneSource, India's premier Specialty Pharma CDMO specializing in biologics, complex injectables, and oral technologies such as soft-gelatin capsules, is poised to unlock significant value for shareholders through the establishment of two distinct operating entities with dedicated executive teams. Shareholders stand to benefit from this value discovery initiative, holding 44 per cent ownership in OneSource, translating to an implied value of Rs 364 per share of Strides, and receiving one share of OneSource for every two shares of Strides, reflecting a swap ratio of 1:2, thereby enabling shareholders and investors to independently assess the value proposition of both businesses.

In the realm of recent market activity, a noteworthy bulk deal involving Strides Pharma Science Ltd. transpired on February 9, 2024, on the Bombay Stock Exchange, with 1,140,301 shares exchanging hands at an average price of Rs 713.00. Notably, Amansa Holding Private Ltd emerged as the buyers. 

In terms of stock performance, Strides Pharma Science Ltd. has exhibited remarkable growth, surging nearly 134 per cent over the past year, cementing its status as a multibagger stock and capturing the attention of investors and analysts alike.

Disclaimer: The article is for informational purposes only and not investment advice.