SYNOPSIS:
DAM Capital maintained its buy rating on Strides Pharma Science Limited with a target price of Rs. 1,250 apiece, highlighting strong cash generation, 12 percent revenue CAGR, 17 percent EBITDA growth, and potential valuation re-rating.
During Monday’s trading session, shares of a global pharmaceutical company surged nearly 9.5 percent to hit a new 52-week high at Rs. 1,024.9 on BSE, after DAM Capital maintained a ‘buy’ rating on the stock with a target price of Rs. 1,250 per share, indicating a potential upside of around 27 percent from current price levels.
At 02:10 p.m., shares of Strides Pharma Science Limited were trading in green at Rs. 987.65 on BSE, up by around 6 percent, compared to its previous closing price of Rs. 935.6, with a market cap of Rs. 9,103.4 crores.
The stock has delivered multibagger returns of around 216 percent in one year, and has gained by nearly 19 percent in the last one month. Additionally, the stock has rallied over 20 percent in the past five trading days and is now up nearly sevenfold from its 2023 lows.
Brokerage Target & Outlook
Domestic brokerage firm DAM Capital maintained its “buy” rating on Strides Pharma Science Limited with a target price of Rs. 1,250 per share, representing a potential upside of nearly 27 percent from the current price levels.
The brokerage highlighted that the company’s emphasis on profitability and cash generation, rather than solely focusing on topline growth, positions it distinctly among Indian generic players. This approach, backed by strong execution, has established a solid base for sustainable long-term growth.
DAM Capital noted that the company’s ongoing investments in high-potential areas such as controlled substances, nasal sprays, and transdermal patches are expected to drive enhanced visibility for future growth. It also anticipates steady improvement in operating cash flow (OCF), supported by moderate capital expenditure, which could enable Strides to generate free cash flow (FCF) of ~Rs. 1,300 crore between FY25 and FY27. This, in turn, is likely to aid in reducing leverage and may allow for cash returns to shareholders.
The brokerage projects revenue CAGR of around 12 percent and EBITDA growth of nearly 17 percent between FY25 and FY27, driven primarily by strong momentum in the US and other regulated markets (ORM). It also expects return on equity (ROE) and adjusted return on capital employed (ROCE) to stand at 19 percent and 20 percent, respectively, with additional upside potential from upcoming product launches.
DAM Capital further added that Strides appears attractively valued at 14x its estimated FY27 earnings per share, trading at a notable discount compared to global generic peers. With strong visibility on earnings, improving cash generation, and ongoing execution of its strategic initiatives, the brokerage expects a potential valuation re-rating in the coming quarters.
Financials & More
Strides Pharma reported a marginal growth in its revenue from operations, showing a year-on-year increase of around 5 percent from Rs. 1,167 crores in Q2 FY25 to Rs. 1,221 crores in Q2 FY26.
Similarly, its net profit increased during the same period from Rs. 72 crores to Rs. 132 crores, representing an impressive rise of more than 83 percent YoY. Strides Pharma Science Limited is engaged in the business of developing and manufacturing a wide range of IP-led niche pharmaceutical products. It mainly operates in the regulated markets, including key markets of the US, Europe, Australia, and South Africa.
The company is an integrated manufacturer and exporter of Finished Pharmaceutical Dosage forms for both branded and generic, along with manufacturing a wide range of ethical pharmaceutical products, OTC products and nutraceuticals. Their dosage forms include tablets, capsules, soft gelatin capsules, parenterals and semisolids.
Written by Shivani Singh
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