Brokerages largely recommend subscribing the issue given the domestic dependence and focus on lifestyle disorders.
Eris Lifesciences’ IPO witnessed a not-so-exciting response from investors, with the issue being subscribed just 0.21 times as of 12 pm on Monday—the second day of the issue.
Against a total 1,59,48,750 shares up for grabs, the issue received bids for just 32,84,760 shares, data available with the NSE showed.
The company set to raise Rs 1,800 crore through an IPO which will give an exit to Chrys Capital, which holds around 16.25 percent in the company.
The initial public offer (IPO) will see sale of 28,875,000 equity shares by the existing shareholders. Private equity giant ChrysCapital's investment arm Botticelli would sell its entire 16.25 per cent stake, or 22,344,000 shares, in Eris Lifesciences. The issue will close on June 20. The price band for the issue has been set between Rs 600 and Rs 603.
Axis Capital, Citigroup Global Markets India and Credit Suisse Securities (India) are the book running lead managers to the issue.
Moneycontrol tells you what brokerages are talking about the issue.
Angel Broking| Rating: Subscribe
The brokerage house highlighted that the company’s focus on chronic and specialty acute therapeutic segments was a good strategy. It gained market share in most of the therapeutic segments of its focus.
Moreover, with no plans for exports, the company is insulated from the risk of foreign regulator and higher expenses for R&D.
On the valuations front, it said that its FY2017 earnings per share (EPS) of Rs 17.6, the issue is priced at P/E of 34.25x, which is at par with its MNC peers but higher than domestic peer, Alkem Labs. “Considering that Eris’ faster growth, superior returns, debt free status, and specialty play, we believe that this is a fair valuation,” the brokerage house said in its report. We believe that Eris is likely to continue growing faster than its competitors owing to its marketing capability, higher operating leverage and growing market share of its mother brands.
Geojit Financial Services | Rating: Subscribe
Geojit recommended subscribing to the issue with a medium to long term perspective on the back of its unique business model and strong focus on Tier-I cities and metros.
Moreover, it stated that numbers for doctor prescriptions show that the company was one of the favourite choices of practitioners. It is also among the top five companies in India by prescription share.
“Doctors prescribing ELL products has increased to 50,282 (from 37, 842 in FY13) with a prescription share of 1.3 percent in FY17,” it said in a report.
The company is consistently showing improved top and bottom lines with revenue and EBITDA growing at a CAGR of 16.5 percent and 32 percent respectively during FY13-17, it added.
ICICI Securities | Rating: Subscribe
The brokerage house also highlighted the company’s focus on lifestyle disorders, which are chronic in nature. Even in the acute segment, it said, the company focused on categories that are connected to lifestyle disorders that are required to be prescribed over an extended period.
Moreover, the company is among the top five companies in India by prescription share. Doctors prescribing in metro cities and class 1 towns in India of Eris products have increased from 37,842 (constituting 13.8 percent of total doctors) in FY13 to 50,282 (constituting 15.7 percent of total doctors) in FY17.
Khambatta Securities | Rating: Subscribe
The specialist and super-specialty such as diabetologist/endocrinologist, cardiologist and gastroenterologist who prescribe high value prescription are the main target audience of Eris, the brokerage house said in its report.
At upper price band of Rs 603, stock is available at P/E of 31.98x FY17E. At lower price band of Rs 600, stock is available at 31.82x FY17E EPS. “Considering high growth prospects and expanding profitability while being a pure domestic player we believe forward multiple would be cheaper at current rate and offers an investment opportunity at current level,” it said in its report.
Sharekhan | Rating: Subscribe
Sharekhan highlighted that the company has guided into venturing into new therapeutic segments in the industries such as neurological pain, dermatology and gynecology. The company also plans to expand in products with niche capabilities such as injectable products.
“The company expects to leverage its existing sales, marketing and distribution infrastructure to explore in licensing opportunities. The sales team comprises of 1,501 MRs,” the report added.It also highlighted that the company now awaits patent expiries of six products (sitagliptin, vildagliptin, linagliptin, insulin aspart protamine crystalline recombinant, and ticagrelor and liraglutide recombinant) in the cardiovascular and antidiabetics therapeutic areas, which are expected to expire by FY24.