Buy Eris Lifesciences; target of Rs 1740: Prabhudas Lilladher

Prabhudas Lilladher's research report on Eris Lifesciences

Eris Lifesciences’(ERIS) Q4FY25 EBITDA was in line with our estimate (Rs2.5bn; up 70% 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 scale up from the current level of 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, tapping GLP-1 market, demand supply mismatch in insulin segment, creating large injectable franchise across India and RoW market and benefits of operating leverage, as revenue scales up from these acquisitions.

Outlook

Our FY26 and FY27E EBITDA broadly remains unchanged. We maintain ‘BUY’ rating with revised TP of Rs1,740 (valuing at 18x EV/EBITDA on FY27E vs 15x earlier).

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