Strides Shasun’s Q1 FY17 pharma revenues grow 43 per cent YoY

To carve out API commodity division as increasing compliance costs cut margins

Announcing its quarter results for the first time under Indian Accounting Standards (Ind-AS), Strides Shasun’s Q1 FY17 results show total revenues at Rs 8,699 million against Rs 6,094 million in Q1 FY16, up 43 per cent YoY. The company has clarified that due to changes under Ind-AS, SEBI results publish gross revenues versus net revenues in the past, however for comparison to historical performance, the release shows revenues as gross revenues – excise.

Reportedly, gross margin improved two per cent, to 51 per cent versus 49 per cent in Q1 FY16, with an expansion of 140 bps. R&D spend for the quarter at Rs 228 million was up by 75 per cent YoY while total EBITDA was at Rs 1,437 million against Rs 883 million, up by 63 per cent YoY. Net interest cost for the quarter was at Rs 390 million. Depreciation and amortisation for the quarter was Rs 484 million. There was an increase in depreciation and amortisation on account of full quarter impact of acquisitions from previous quarter and closure of Moberg portfolio and Universal Corporation acquisitions during the quarter. Adjusted PAT for Q1 FY 17 was at Rs 417 million, adjusted EPS at Rs 4.67.

Arun Kumar, Executive Vice Chairman and Managing Director, Strides Shasun stated, “Our regulated markets business and institutional business continue to track well and have delivered another strong quarterly performance. Integration of inorganics in emerging markets has taken longer than we anticipated. All the acquired businesses are now integrated and we believe emerging markets will return to normal growth in the near future. The commodity API business continues to put pressure on margins with cost of compliance going up. We are focussed on improving the quality of our businesses and have taken various initiatives that will start bearing results in the second half of the fiscal year.”

One of these initiatives is to carve out the API commodity division as a 100 per cent subsidiary.