Current Rating and Its Significance
MarketsMOJO’s 'Hold' rating for Strides Pharma Science Ltd indicates a balanced outlook for investors. It suggests that while the stock is not an outright buy, it is also not a sell, reflecting moderate confidence in the company’s prospects. This rating advises investors to maintain their current holdings without aggressive accumulation or liquidation, pending further developments.
Quality Assessment
As of 09 January 2026, Strides Pharma Science Ltd exhibits a below-average quality grade. The company’s long-term fundamental strength remains weak, with an average Return on Capital Employed (ROCE) of 7.27%. Over the past five years, net sales have grown at a modest annual rate of 9.87%, while operating profit has increased by 12.79% annually. These figures indicate steady but unspectacular growth, which may not be sufficient to drive significant shareholder value in the near term.
Additionally, the company’s debt servicing capability is a concern, with a high Debt to EBITDA ratio of 6.58 times. This elevated leverage level suggests increased financial risk, particularly in volatile market conditions, which investors should monitor closely.
Valuation Perspective
Despite the quality concerns, the valuation grade for Strides Pharma Science Ltd is attractive. The company currently trades at a ROCE of 15.6 and an Enterprise Value to Capital Employed ratio of 2.4, signalling a discount relative to its peers’ historical valuations. This valuation appeal is further underscored by the stock’s strong price performance, having delivered a 43.10% return over the past year as of 09 January 2026.
However, it is important to note that while the stock price has appreciated significantly, the company’s profits have declined by 14.7% during the same period. This divergence between price appreciation and profit contraction warrants caution, as it may reflect market optimism not fully supported by underlying earnings trends.
Financial Trend and Profitability
The financial trend for Strides Pharma Science Ltd is positive, with the company reporting favourable results for nine consecutive quarters. Key quarterly metrics include an operating profit to interest ratio peaking at 5.02 times, a PBDIT of Rs 231.56 crores, and a PBT less other income of Rs 134.75 crores. These figures demonstrate operational resilience and an ability to generate consistent earnings despite broader sector challenges.
Moreover, the stock has delivered consistent returns over the last three years, outperforming the BSE500 index in each annual period. This track record of steady performance adds to the rationale behind the 'Hold' rating, suggesting that the company maintains a stable market position.
Technical Analysis
From a technical standpoint, Strides Pharma Science Ltd is currently rated bullish. The stock has shown positive momentum with a 6.98% gain over the past week and an 8.48% increase in the last month. The year-to-date return stands at 7.04%, reinforcing the stock’s upward trend in recent months. This technical strength supports the 'Hold' rating by indicating potential for further gains, albeit with some caution due to fundamental factors.
Risks and Considerations
Investors should be mindful of certain risks associated with Strides Pharma Science Ltd. Notably, 44.13% of promoter shares are pledged, which can exert downward pressure on the stock price during market downturns. High promoter pledging often signals potential liquidity concerns or financial stress, which may affect investor sentiment negatively.
Furthermore, the company’s below-average quality grade and high leverage highlight vulnerabilities that could impact future performance, especially if market conditions deteriorate or sector headwinds intensify.
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Investor Takeaway
Strides Pharma Science Ltd’s 'Hold' rating reflects a nuanced view of the company’s current standing. While the stock benefits from attractive valuation and positive technical momentum, its below-average quality and financial leverage temper enthusiasm. Investors should consider maintaining existing positions while monitoring key indicators such as debt levels, profit trends, and promoter share pledging.
The stock’s consistent returns and operational resilience provide some reassurance, but the mixed signals from valuation and fundamentals suggest a cautious approach. For those seeking exposure to the Pharmaceuticals & Biotechnology sector, Strides Pharma Science Ltd offers a balanced risk-reward profile that merits attention without aggressive commitment.
Summary of Key Metrics as of 09 January 2026
- Mojo Score: 57.0 (Hold)
- Market Cap: Smallcap
- 1-Year Return: +43.10%
- 5-Year Net Sales Growth: 9.87% CAGR
- 5-Year Operating Profit Growth: 12.79% CAGR
- ROCE: 7.27% (long term), 15.6 (current valuation basis)
- Debt to EBITDA Ratio: 6.58 times
- Promoter Shares Pledged: 44.13%
These figures provide a comprehensive snapshot of the company’s financial health and market performance, supporting the rationale behind the current 'Hold' rating.
Conclusion
In conclusion, Strides Pharma Science Ltd’s current 'Hold' rating by MarketsMOJO, updated on 29 September 2025, is justified by a combination of attractive valuation, positive financial trends, and technical strength, balanced against below-average quality and elevated financial risk. Investors should weigh these factors carefully when considering their portfolio allocation, recognising that the stock offers moderate potential with some inherent risks.
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