Strides Pharma Science Ltd (STAR) Q2 FY27 Results Analysis: Revenue Grows 17%, Margins Miss Guidance

Strides Pharma Science Ltd's Q2 FY27 numbers came in soft, with revenue of Rs. 1,429.73 Cr (+17.11% YoY) and PAT growth of +1.97% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quarter Snapshot

Revenue accelerated to +17.11% YoY but the quarter missed management's own margin guidance on both gross margin (55.98% vs 58-60%) and EBITDA margin (17.55% vs 18-20%), with fresh sequential COGS compression. Cash quality deteriorated sharply — H1 CFO/PAT of 0.36x, negative FCF, and net debt up ~Rs.275 Cr QoQ contradict the stated deleveraging plan. Key H2 markers are confirmation of the Sandoz close and whether gross margin re-enters the 58-60% band.

Key Investment Insights

Key Positives

• Revenue grew 17.11% YoY to Rs.1,429.73 Cr and 12.99% QoQ, accelerating from Q1 FY27's 13.0% YoY
• EBITDA grew 8.31% YoY to Rs.250.91 Cr in absolute terms
• Normalized PAT grew 10.12% YoY to Rs.135.64 Cr vs reported PAT growth of 1.97%
• Standalone revenue grew 26.38% YoY with standalone EBITDA up 14.78% YoY
• Standalone PBT ex-gain was +106% QoQ (Rs.17.23 Cr vs Rs.8.36 Cr)
• Employee costs were well-controlled at 16.67% of revenue vs 19.20% in Q1 FY27

Risk Factors

• Gross margin fell to 55.98%, below the guided 58-60% band and down 489bps QoQ, with COGS at 52.17% of revenue vs 38.63% a year ago
• EBITDA margin of 17.55% fell below the guided 18-20% band, down ~140bps YoY
• PBT before exceptional items fell 7.18% YoY despite 17.11% revenue growth
• H1 CFO/PAT collapsed to 0.36x from 1.65x, with FCF negative at −Rs.159.88 Cr
• Net debt rose ~Rs.275 Cr QoQ to Rs.1,699.64 Cr, contradicting the stated FCF-to-debt-reduction plan
• Effective tax rate of 10.85% (deferred-tax credit) flattered reported PAT growth of 1.97%