Solara Active Pharma Sciences - Pure Play API

Mismanagement, poor allocation, confused strategy- the promoter group has become a joke. Aurore was part of the investment thesis for a diversified Api co- now it’s back to a commodity only. Group debt is at alarming levels, more than the combined market cap of listed companies.

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What co-relation does this news opinion video has with Solara? The article is also very generic and do not point to anything distinct.

New CRISIL report about Solara May11 2022

Ratings downgraded to 'CRISIL BBB+/Negative/CRISIL A2 from ‘Watch Developing’

A good detailed report about current distressed state of Solara.

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Agree , they have indeed picked up pain points. Sales needs to stabilize , Under absorption of overheads at Vizaj needs to be fixed (need FDA validation as well), New Product Pipe line to absorb annual R&D costs (this happed only once in history of Solara i.e. 2021-2022 , they couldn’t do it ) , Raw material costs needs to fall in (if not consider partial price increase , depends on customer contracts) , working capital needs to be reduce … All these will take lot of hard work and focused approach… Execution is the key. Lets wait for next 3 to 4 Qtrs… FY 2022-23 is a turnaround year… even if they completed 60% of what they have planned it will be good… till that time dont look at Stock price. it was almost available at BV yesterday…

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Investors seemed to have lost faith in this group. The stock price is not far from the demerger price in 2017. Company has to show a very strong performance to get the market confidence back. Narratives will not go far in a bear market.

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Doesn’t it seems strange that all CEO’s in Strides + demerged entities (Sequent + Solara) have quit over the last year? Does that speak something larger about the group or was it just a coincidence?

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I think these were decisions from Arun Kumar, rather than them quitting. I believe the founder is trying to take this malfunctioning by the horns and steer it in the right direction, something the professionals were unable to manage.

Also understand that they will be merging all the associated entities like Stelis and Steriscience together with Strides Pharma now.

Is there any source for this ?

This is big bold claim. Need a source.

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it is not possible shareholders annd bankers wont approve of the merger and there is also a pledge. Also what synergies will the merger offer or the additional capabilities.

Can someone pls update on Solara - what is going wrong in this company? Is there any possibility of them coming back on track?

There are multiple things that are not going well for this stock apart from the timing:

  1. They changed the business model when their primary product ibuprofen was coming under pressure. The quarterly revenue dropped by 75%
  2. The top management either got fired or resigned and the promoters never explained it adequately.
  3. They initiated the Merger and then dropped the plan.
  4. This caused the market to tumble, further deteriorating their debt-to-equity ratio.

P.S.: I am still invested as I do hope that mgmt experience will come in handy to ensure that they are able to get back their mojo.

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Vizaj plants got European Union regulatory approval for Ibuprofen. Expecting better results this qtrs vs previous 2 qtrs extremely disruptive numbers…I am giving 2 more qtr before I make a decision on this script…as such all bad news are factored in CMP.

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Results and Investor Presentation
Q2FY23 Concall Transacript

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Arun Kumar and Karuna business solutions (owned by Arun kumar) have done a off-market transaction with other promoter and reduced their holding in Solara in past two days. Together they have reduced their holding by 5.8%. Since Mar’22 their combined holding is down by more than 10%

Was it something they had annouced before? I can’t find anything in earlier concall.

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