Eris Lifesciences’(ERIS) Q3FY25 EBITDA was in line with our estimate (Rs2.5bn; 43% YoY). Eris has opted for inorganic route to diversify and scale up existing portfolio. This has been implemented without diluting margins. We expect margins to sustain at +35% as revenue scales up from recent acquisitions, which are currently operating at sub-optimal profitability. The company has multiple growth levers such as broad-based offerings in the derma segment, opportunities in the cardiometabolic market with patent expirations and benefits of operating leverage, as revenue scales up from these acquisitions.
OutlookOur FY26 and FY27E EBITDA broadly remains unchanged. We maintain ‘BUY’ rating with revised TP of Rs1,450 (valuing at 15x EV/EBITDA on FY27E).
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