Ahmedabad based Eris Lifesciences (Eris) is a domestic branded
formulations focused pharmaceutical company with emphasis on lifestyle
related specialised therapeutic areas. The company was promoted by first
generation entrepreneur Amit Bakshi in 2007. As on FY17, its product
portfolio comprised 80 mother brand groups and is primarily focused on
therapies that require the intervention of specialists and super specialists.
The acute: chronic ratio was at 34:66 pertaining to FY17 revenues. The
company derived ~77% of revenues from metro cities and class-1 towns.
It is ranked 20th out of 377 companies present in the chronic category of
the IPM (IMS MAT March 2017). It owns a manufacturing facility in
Guwahati, Assam, which is currently operating at ~30% capacity
utilisation. The company reported a revenue CAGR of 17% in FY13-17 to
| 725 crore and PAT CAGR of 43% to | 242 crore during the same period.
Valuations
At the upper band of | 603, the stock is available at 34.3x FY17 EPS of
| 17.6. We has assigned SUBSCRIBE recommendation to the issue based
on the management dynamism, robust financial performance, healthy
return ratios, leverage free balance sheet and strong free cash flows.
Superior business and financial matrix justify premium valuation.
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