Solara Active Pharma Sciences Limited (NSE:SOLARAPP) Has Found A Path To Profitability

Solara Active Pharma Sciences Limited (NSE:SOLARAPP) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Solara Active Pharma Sciences Limited manufactures, produces, processes, formulates, sells, imports, exports, merchandises, distributes, trades in, and deals in active pharmaceutical ingredients (API) in India, Asia Pacific, Europe, North America, South America, and internationally. The ₹41b market-cap company posted a loss in its most recent financial year of ₹5.7b and a latest trailing-twelve-month loss of ₹5.4b shrinking the gap between loss and breakeven. The most pressing concern for investors is Solara Active Pharma Sciences' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Solara Active Pharma Sciences

Expectations from some of the Indian Pharmaceuticals analysts is that Solara Active Pharma Sciences is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of ₹855m in 2025. Therefore, the company is expected to breakeven roughly 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 95%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Solara Active Pharma Sciences' growth isn’t the focus of this broad overview, but, bear in mind that typically pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we would like to bring into light with Solara Active Pharma Sciences is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Solara Active Pharma Sciences' case is 75%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Solara Active Pharma Sciences, so if you are interested in understanding the company at a deeper level, take a look at Solara Active Pharma Sciences' company page on Simply Wall St. We've also compiled a list of pertinent factors you should further examine:

1. Valuation: What is Solara Active Pharma Sciences worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Solara Active Pharma Sciences is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Solara Active Pharma Sciences’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.