Strides Pharma Science Ltd Upgraded to Hold on Improved Technicals and Valuation

Technical Trends Shift to Mildly Bullish

The primary catalyst for the rating upgrade is the change in Strides Pharma’s technical grade, which has moved from a sideways trend to a mildly bullish stance. Daily moving averages have turned mildly bullish, signalling positive momentum in the short term. Although weekly and monthly MACD indicators remain mildly bearish, the monthly Bollinger Bands have shifted to bullish, suggesting potential for upward price movement in the medium term.

Other technical indicators present a mixed picture: the weekly and monthly KST (Know Sure Thing) remain mildly bearish, and Dow Theory analysis shows a mildly bearish weekly trend with no clear monthly trend. Meanwhile, RSI readings on both weekly and monthly charts show no significant signals, and On-Balance Volume (OBV) remains neutral. Despite these mixed signals, the overall technical environment has improved sufficiently to warrant a more optimistic outlook.

On 10 Feb 2026, Strides Pharma’s stock price closed at ₹880.00, up 1.86% from the previous close of ₹863.90. The stock traded within a range of ₹864.00 to ₹891.00 during the day, remaining below its 52-week high of ₹1,024.90 but well above the 52-week low of ₹551.00.

Valuation Metrics Turn Attractive

Strides Pharma’s valuation grade has improved from very attractive to attractive, reflecting a more balanced risk-reward profile. The company’s price-to-earnings (PE) ratio stands at 14.72, considerably lower than several peers such as Ajanta Pharma (PE 35.14) and Gland Pharma (PE 35.92), indicating a relative discount. The enterprise value to EBITDA ratio of 10.77 and EV to capital employed of 2.22 further support the attractive valuation thesis.

Return on capital employed (ROCE) is a healthy 15.60%, and return on equity (ROE) is similarly robust at 15.82%. These figures suggest efficient capital utilisation and profitability. Dividend yield remains modest at 0.45%, consistent with the company’s focus on reinvestment and growth.

Compared to its pharmaceutical sector peers, Strides Pharma’s valuation metrics position it as a more affordable option, especially when considering its consistent profitability and improving financial trends.

Financial Trend: Strong Quarterly Performance Amid Mixed Long-Term Growth

Strides Pharma has demonstrated very positive financial performance in the third quarter of FY25-26, with net profit growth surging by 133.64%. The company reported a quarterly PAT of ₹204.91 crores, marking a 128.0% increase compared to the previous period. This marks the tenth consecutive quarter of positive results, underscoring operational consistency.

Operating profit to interest coverage ratio reached a high of 5.44 times, indicating strong ability to service debt in the short term. The half-year ROCE peaked at 16.05%, reinforcing efficient capital deployment. However, despite these encouraging quarterly results, the company’s long-term fundamentals present a more nuanced picture.

Over the past five years, net sales have grown at a modest annual rate of 9.32%, while operating profit has expanded at 15.52% per annum. The average ROCE over the long term is a weaker 7.27%, suggesting challenges in sustaining high returns. Additionally, the company’s debt to EBITDA ratio remains elevated at 6.58 times, signalling potential leverage risks.

Strides Pharma’s stock has delivered an 18.01% return over the last year, outperforming the Sensex’s 7.97% gain. Over three years, the stock’s cumulative return of 511.65% vastly exceeds the Sensex’s 38.25%, highlighting strong long-term capital appreciation despite some recent volatility.

Technical and Valuation Improvements Drive Upgrade Despite Risks

The upgrade to Hold reflects a balanced assessment of Strides Pharma’s prospects. The improved technical outlook, with daily moving averages turning mildly bullish and monthly Bollinger Bands signalling upward momentum, supports a more positive near-term price trajectory. Meanwhile, the attractive valuation relative to peers provides a cushion against downside risk.

Nevertheless, investors should remain cautious of certain headwinds. Approximately 30.6% of promoter shares are pledged, which could exert downward pressure on the stock in falling markets. The company’s high leverage and moderate long-term growth rates also temper enthusiasm for a stronger rating.

Overall, the Hold rating recognises the company’s recent operational improvements and valuation appeal while acknowledging the need for continued monitoring of financial leverage and promoter share pledging.

Comparative Performance and Market Context

Strides Pharma’s stock has outperformed the broader market over multiple time horizons. Its one-week return of 5.31% notably exceeds the Sensex’s 2.94%. However, the stock has experienced a 6.69% decline over the past month, contrasting with the Sensex’s modest 0.59% gain. Year-to-date, the stock is down 2.48%, slightly worse than the Sensex’s 1.36% decline.

Longer-term returns remain impressive, with five-year gains of 115.89% compared to the Sensex’s 63.78%, and a three-year return of 511.65% dwarfing the Sensex’s 38.25%. The ten-year return of 77.62% trails the Sensex’s 249.97%, reflecting some challenges in sustaining growth over the very long term.

These figures highlight Strides Pharma’s ability to generate strong returns in recent years, supported by operational improvements and favourable valuation, but also underscore the importance of monitoring market volatility and sector dynamics.

Conclusion: Hold Rating Reflects Balanced Outlook

The upgrade of Strides Pharma Science Ltd’s investment rating from Sell to Hold is justified by a combination of improved technical indicators, attractive valuation metrics, and strong recent financial performance. The company’s consistent quarterly profitability and efficient capital utilisation underpin a positive near-term outlook.

However, elevated leverage, promoter share pledging, and moderate long-term growth rates warrant caution. Investors should weigh these factors carefully and monitor developments closely. The Hold rating signals a neutral stance, recognising both the upside potential and the risks inherent in the stock’s current profile.

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