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This Pharma Stock Has Fallen From Rs 947 To Rs 455, Should You Buy?
Pharma stocks in general have seen a sharp sell-off in the last few months. In fact, stocks like Aurobindo Pharma have lost almost 30 to 35% from 52-week highs. Even Strides Pharma Science has fallen sharply.
Strides Pharma stock has halved from 52-week highs
| Current market price | 52-week high | Fall |
|---|---|---|
| Rs 455 | Rs 947 | 52.00% |
The stock of Strides Pharma has fallen from 52-week high levels of Rs 947 to the current levels of Rs 455. One of the reasons attributed for the sharp fall is the losses that the company has reported in the second quarter ending Sept 30, 2021.
The company suffered a price erosion in one of its base products in the US markets, which impacted profitability of Strides. We do not expect the trend to change at least in the next few quarters.
Dismal performance for the 2nd quarter ending Sept 30, 2021
For the quarter ending Sept 30, 2021, the company has reported a net loss of Rs 168 crores. In an interview to the Economic Times, R Ananthanarayanan, Managing Director & CEO, said that the silver lining is that the entire month of October they haven't seen any price challenge, so they believe that the pricing environment is stabilising at much lower levels.
The problem right now for Strides Pharma is that the problem is more structural and that is not good news. One off things like a US FDA warning can still be resolved, but, deeply rooted pricing problems could well take time.
Should you buy the stock of Strides Pharma Science?
The other problem for the company is that it has high debt, which it needs to service. According to data available through Simply Wall Street, the debt level in terms of debt to equity ratio is 88.3%, which is certainly quite high.
At the current market price of Strides Pharma it is hard to suggest investors to buy the stock. They key here remains the performance of the company in the US markets for which one will have to wait and see the numbers for the December quarter or at least a positive management commentary.
It hard to tell investors to buy the stock of Strides Pharma Science and we would advise a wait and watch approach till some clarity emerges in the next few quarters.
Disclaimer
Greynium Information Technologies, and the author are not liable for any losses caused as a result of decisions based on the article. Investing in equities is risky. The author and his family do now own any shares mentioned above.
