Strides Pharma Q1 FY27 Results (NSE: STAR)

31 Jul 2026 · Analysis by Alpha Inflection

Signal: Margin pressure

The read

Revenue grew 13% YoY, but gross margin collapsed ~10.6pp on input cost inflation, and EBITDA margin contracted 132bps. Net profit surged 57% entirely due to a ₹632 Mn exceptional gain from selling majority stake in Pivot Path. Underlying operating profit (PBT before exceptional) rose only 5.7%. This is a reversal after 8 consecutive quarters of margin expansion, signaling a structural cost challenge if raw material prices persist.

P&L walk

Revenue 13% YoY growth driven by volume, but gross margin collapsed 10.6pp to 60.9% due to a 59% surge in raw material costs. EBITDA margin contracted 132bps to 18.2% as other expenses rose. Underlying PBT before exceptional grew only 5.7%; the net profit jump to ₹1,655 Mn (+57%) is almost entirely from a ₹632 Mn exceptional gain on sale of Pivot Path.

Key positives

• Revenue growth of 13% YoY to ₹12,654 Mn, broadly in line with prior trend.
• Exceptional gain of ₹632 Mn (net) from Pivot Path sale strengthens balance sheet and reduces debt.
• Net profit jumped 57% YoY to ₹1,655 Mn and EPS rose 57% to ₹17.02.
• Employee cost ratio improved 90bps YoY to 19.2%.
• Finance costs declined 14.5% YoY due to lower debt levels.

Key concerns

• Gross margin collapsed 10.6pp to 60.9% as raw material costs surged 59% YoY, far outpacing revenue growth.
• EBITDA margin contracted 132bps to 18.2% despite revenue growth, indicating weak operating leverage.
• Underlying PBT before exceptional grew only 5.7% — core operating profit nearly stagnant.
• Standalone PBT before exceptional fell 49% YoY to just ₹83.6 Mn, pointing to severe strain at parent level.
• Product recall and settlement costs (₹110 Mn) continue to weigh on profitability.
• Other expenses ratio rose 280bps to 23.5%, pressuring margins.

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