Strides Pharma (STAR)

FairStock Score: 56/100 — STEADY

Score breakdown: P/E: 2/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Profit growth of 128.03% and latest quarter net profit of ₹208 Cr on sales of ₹1,195 Cr show strong margin expansion.
• Piotroski F-Score of 7/9 indicates improving financial health and operational efficiency.
• Reasonable valuation at P/E of 14.29 and P/B of 2.85 relative to the earnings surge.
• ROCE of 14.68% is respectable and debt/equity of 0.66 is manageable.

Concerns

• ROE of just 5.22% is very low, suggesting weak return on shareholder equity despite headline profit growth.
• Sales growth of only 3.55% is tepid; top line is not supporting the earnings recovery.
• Promoter holding of 27.86% is on the lower side, raising governance and alignment concerns.
• Dividend yield of 0.47% offers minimal income while waiting for a turnaround to prove durable.

AI Analysis

Let me start with what I like. At ₹1,069, Strides Pharma trades at 14.29 times earnings and 2.85 times book. The bottom line has exploded—profit growth of 128%—and the latest quarter shows ₹208 Cr net profit on ₹1,195 Cr sales, a 17% margin. The Piotroski score of 7 out of 9 tells me the balance sheet and operations are improving, not deteriorating. Debt-to-equity of 0.66 is manageable, and ROCE of 14.68% is respectable. But I have to be honest. A 3.55% sales growth is not the kind of compounding top line I want. And if the business is truly this good, why is ROE only 5.22%? Book value is ₹374.74, yet the company earns barely five percent on it. That suggests either excess capital, a weak recent past, or earnings that may not be repeatable. The 128% profit growth sounds magnificent, but from a low base, and the latest quarter's profit margin may not be the new normal. As Graham would say, price is what you pay, value is what you get. At 14 times earnings and 2.85 times book, I am not getting a bargain if growth stalls. Promoter holding of 27.86% is low for an Indian pharma company; I want owner-operators with more skin in the game. Dividend yield of 0.47% gives me little while I wait. This looks like a turnaround, not a stalwart. The market has already re-rated it from ₹768 to ₹1,069. I need to see sales growth revive and ROE move toward ROCE before I would commit new capital. Show me consistent margin, lower debt, and organic expansion. Then the low P/E becomes interesting. Until then, I watch.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer