Revenue rises, but faster cost growth cuts Strides' operating margin
The consolidated margin fell 1.42 percentage points YoY, while sequential profit was reduced by lower other income and higher interest costs.
Filed 29 Oct 2026, 18:43 IST · after market close · Strides Pharma Science Ltd (STAR)
Key takeaways
- Consolidated revenue grew +17.11% YoY, but expenses grew faster at +19.16%, narrowing operating margin by 1.42 percentage points to 17.55%.
- Sequential net profit fell -18.96% as other income dropped -95.09% and interest expense rose +14.74%, despite a 6.24-percentage-point decline in the tax rate.
- Strides' 17.55% operating margin was 2.35 percentage points below the 19.90% median for 31 reported Healthcare peers.
Price around the results
Revenue growth did not translate into operating leverage
Consolidated revenue rose +17.11% YoY to Rs 1,429.73 cr, but expenses increased +19.16%, limiting operating-profit growth to +8.35%. That cost gap reduced operating margin by 1.42 percentage points to 17.55% from a year earlier. Sequentially, revenue grew +12.99%, while expenses grew faster at +13.83%, cutting margin by 0.61 percentage points.
Lower tax softened the YoY profit impact
Net profit increased only +1.98% YoY because higher operating profit was offset by a 15.27% rise in depreciation and an 81.06% fall in other income. The tax rate declined by 3.25 percentage points YoY to 10.85%, which supported net profit despite a 1.75% fall in profit before tax. Other income accounted for 2.18% of pre-tax profit, so it was not a large contributor to reported profit in this quarter.
Margin remains below the recent high
Operating margin has moved down from 19.75% in Q3FY26 to 18.11% in Q4FY26, 18.16% in Q1FY27 and 17.55% in Q2FY27, although the sequence was not a continuous decline because Q1FY27 edged up from Q4FY26. The current margin was 2.35 percentage points below the 19.90% median among 31 Healthcare peers that had reported.
No immediate market reaction yet
The company filed its consolidated results after market close, so there was no market reaction to report. Across the stock's eight recent result-day reactions, six were positive and two were negative, with a median absolute move of 3.49%.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,430 cr | ₹1,265 cr | +12.99% | +17.11% |
| Other income | ₹3 cr | ₹67 cr | -95.09% | -81.06% |
| Expenses | ₹1,179 cr | ₹1,036 cr | +13.83% | +19.16% |
| Operating profit | ₹251 cr | ₹230 cr | +9.20% | +8.35% |
| Operating margin (%) | 17.55% | 18.16% | — | — |
| Interest | ₹47 cr | ₹41 cr | +14.74% | +0.89% |
| Depreciation | ₹57 cr | ₹56 cr | +1.45% | +15.27% |
| Profit before tax | ₹150 cr | ₹200 cr | -24.64% | -1.75% |
| Tax | ₹16 cr | ₹34 cr | -52.17% | -24.41% |
| Net profit | ₹134 cr | ₹165 cr | -18.96% | +1.98% |
| EPS (₹) | ₹14.19 | ₹17.02 | -16.63% | +2.53% |
Operating margin of 17.55% compares with a Healthcare sector median of 19.90% across 31 peers that have reported Q2FY27.
What to watch
- Whether operating margin holds above 17.55% after the recent decline from 19.75% in Q3FY26.
- Whether expense growth falls below the +13.83% sequential pace recorded in Q2FY27.
- Whether the tax rate remains near 10.85% without again relying on a lower rate to support net profit.