Strides Pharma arm gets Rs 525-crore deferred consideration for Aussie deal, shares spike

Strides Pharma’s step-down subsidiary in Singapore received AUD 94 million or Rs 525 crore as the deferred consideration for the sale of the Company’s Australian operations in 2019. The proceeds will be utilized for deleveraging the balance sheet, the firm said in an exchange filing.

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Strides Pharma Science share price gained over 2 percent intraday on December 22 after the company’s step-down subsidiary received deferred consideration for the sale of its Australian operations.

Strides Pharma’s step-down subsidiary in Singapore received AUD 94 million or Rs 525 crore as the deferred consideration for the sale of the Australian operations in 2019. The proceeds will be used in deleveraging the balance sheet, the company said in an exchange filing.

“Strides, in 2019, exited its investments in Australia for AUD 394 million. The company received AUD 300 million immediately on the transaction’s closing, and the same was used towards significant deleveraging of the balance sheet through repayment of debt. The balance of AUD 94 Million was a deferred consideration backed by a secured interest-bearing instrument,” it said.

Strides continues to be a preferred supplier to Arrotex, which is the largest generic company in Australia, the company said.

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At 11:48am, Strides Pharma Science was quoting at Rs 374.40, up Rs 8.30, or 2.27 percent on the BSE. It has touched an intraday high of Rs 392.20 and an intraday low of Rs 368.10. The scrip was trading with volumes of 81,534 shares, compared to its five day average of 48,954 shares, an increase of 66.55 percent.

Research and broking firm Sharekhan has a ‘buy’ rating on the stock with a target of Rs 450 per share, an upside of over 20 percent from current market price.

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According to the research firm, Strides Pharma Sciences posted a strong performance in the second quarter with the fourth consecutive quarter of sequential improvement in operating profit margins (OPM) to 9.4 percent. Revenue grew by 24.3 percent YoY to Rs. 897.1 crore while adjusted PAT stood at Rs. 16.7 crore.

The stock price has corrected sharply by 35 percent from its 52-week highs and is trading at reasonable valuations of 17.3x its FY2024 earnings. We retain our ‘buy’ recommendation on the stock with an unchanged target of Rs 450 per share, the brokerage firm said.

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