Geojit BNP Paribas has come out with its report on Eris Lifesciences. The research firm has recommended to "Subscribe " the IPO in its research report as on June 15, 2017.
Eris Lifesciences Ltd (ELL) is a developer cum manufacturer of branded pharmaceutical products in select therapeutic areas of cardiovascular, anti-diabetics, vitamins, gastroenterology and anti-infectives. Company's product portfolio comprises of 80 mother brand groups with the top 10 brands contributing as much as 75% of their total revenues. ELL is primarily focusing on lifestyle diseases encompassing both the chronic (65%) and acute segments(35%). They are currently the fastest growing company among the top 25 players in the chronic segment. It ranks first in terms of revenue growth in the chronic category during FY13-17(CAGR of 28.9%) and third in both cardiovascular and anti-Diabetics therapeutics. Doctor prescription statistics(Rx) shows that ELL is one of the favourite choices of practitioners and is among top five companies in India by prescription share. The Company is consistently showing improved top and bottom lines with revenue and EBITDA growing at a CAGR of 16.5% and 32% respectively during FY13-17. Over the same period PAT grew at a CAGR of 41.7%. We believe that ELL’s healthy revenue growth, high EBITDA margins and low debt bodes well for the company to accelerate growth in the coming years. At the upper price band of Rs603, ELL is available at a P/E of 34x on FY17 EPS which is reasonable given its unique business model and strong focus in Tier 1 cities and Metros. Hence, we recommend ‘SUBSCRIBE’ to the issue, with a medium-to-long term perspective.
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