1. At a Glance

Welcome to Solara Active Pharma Sciences Ltd (NSE: SOLARA), whereAPIdoesn’t just stand forActive Pharmaceutical Ingredient— it’s alsoAlways Problematic Instincts. The company, once the crown jewel of Strides Shasun’s demerged API unit, is crawling its way out of a ₹567 crore loss hangover (FY24), now attempting a comeback with the intensity of a Bollywood sequel nobody asked for — but everyone’s watching anyway.

At ₹617 a share (Nov 4 close), Solara commands a market cap of ₹2,751 crore, down 22.7% over the past year but up 22.6% in the last six months. It trades at a comically inflated P/E of~750, which is Wall Street’s way of saying “we believe in miracles.” Its ROE sits at-0.11%, and debt at₹646 crore(D/E 0.51). Q2FY26 revenue was₹3,140 million(-10% YoY), EBITDA₹352 million, and a PAT loss of₹101 million— better than a ₹567 crore bloodbath last year, but still a patient in the ICU.

Operating margin stands at 15.9%, and interest coverage barely limps at 1.04x — a financial cardio workout for analysts. The promoters hold 42%, with35.3% pledged, which in smallcap language translates to “Haan bhai, thoda tension hai.”

But wait — the company just raised₹450 crorevia a rights issue, repaid ₹118 crore of debt, and is now spinning off its CRAMS and Polymer businesses. The stage is set for a second act. Whether it’sPathaanorTashan, we’ll find out soon.

2. Introduction

Once upon a time in the Indian API jungle, Solara was the ambitious spin-off that promised purity of purpose: one company, one product category, one obsession — APIs. Born from the demerger of Strides Shasun and joined by Sequent’s human API business, Solara strutted onto Dalal Street with a swagger. But like many “pure plays,” the script didn’t stay pure for long.

The company’s early glory days saw it clock over ₹1,600 crore in sales and margins near 24%. Then came the fall — ibuprofen oversupply, inventory write-offs, receivable chaos, and a ₹567 crore loss that made analysts whisper “ouch” in muted tones on concalls. The FY24 results were an accounting horror show: negative operating margins, and more impairments than a soap opera twist.

Fast forward to FY25–26. The CEO’s message reads like a redemption arc: shutting down unprofitable units, streamlining plants, and raising ₹450 crore to strengthen the balance sheet. They’ve gone from “mass-producing painkillers” to “managing shareholder pain.”

In a quarter that saw Mangalore shutdowns, ESOP grants, a new Chief Human Resources Officer, and “no deviation in rights issue fund utilization,” Solara seems to be finally walking the talk — though barefoot on a bed of nails.

And investors? They’re torn between calling it a turnaround story or a science experiment gone right for once.

3. Business Model – WTF Do They Even Do?

Let’s break it down. Solara is apure-play Active Pharmaceutical Ingredient (API)manufacturer — the “raw materials” behind medicines. Think of them as the spice merchants of pharma — supplying the masala that makes pills effective.

They’ve got60+ commercial APIsshipped to over73 countries, across therapeutic areas likeanthelmintics(dewormers),antimalarials, andanti-infectives. Their top 10 molecules contribute a massive84%of total revenue — because diversification is for the weak, apparently.

Their manufacturing spread includessix facilities— each globally compliant, USFDA and EU GMP approved. Translation: “Our plants can legally sell in rich countries.”

TheirR&D center in Chennaihouses 140+ scientists and has filed95 DMFsin the US — that’s the passport of every API to enter the regulated markets. In FY24, R&D spend was 4.3% of sales — not bad, though down from 5% in FY22.

And just as things stabilize, Solara announced it willdemerge its CRAMS and Polymer businesses. These will take the Vizag facility (and ₹200 crore of debt) to form a ₹120 crore revenue entity — a corporate detox maneuver that makes sense if you squint hard enough.

But will this split improve margins, or is it just moving furniture around on a sinking ship? That’s the million-rupee question.

4. Financials Overview

Annualised EPS= -₹2.79 × 4 =-₹11.16→