Market Strategy

52-WEEK BLOCKBUSTER: STRIDES ARCOLAB

Srividhya Sivakumar | Updated on April 21, 2012 Published on April 21, 2012

With attractive filings, new facilities and partnerships in place, Strides Arcolab has had an impressive run throughout last year. The company has an established presence in the attractive and high-margin injectables segment in generics.

With several FDA-approved facilities and joint ventures/ partnerships in place with Pfizer and Sagent, the stock price got a leg up driven by the ongoing capacity shortage in injectables segment in the US. It got an additional thrust following the sale of its Australasian generic business in January this year.

Strides sold its subsidiary, Ascent Pharmahealth, to Watson Pharmaceuticals for AU$ 375 million (about Rs 1,979 crore), valuing it about 4.5 times its 2010 sales (of about Rs 444.2 crore).

Aside of impressive deal valuations, the sale helped in easing the balance sheet concerns for the company. As of September 2011, Strides had a debt of about Rs 1,367 crore (up from Rs 1,280 crore as of end 2010), while its debt-equity ratio stood at about 1.93.

This, however, is likely to come down as the company plans to use the proceeds to reduce its debt by $250 million by the end of calendar year (this included $120 million FCCB due in June). The debt-equity ratio is expected to come down to about 0.75 by then.



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