Buy Eris Lifesciences; target of Rs 666: Prabhudas Lilladher

Prabhudas Lilladher's research report on Eris Lifesciences

We maintain our positive outlook on ERIS but reduce our earnings estimate by 4%/9% for FY21/22E due to delay in launch of derma products. 3QFY21 earnings were in-line with our estiamtes led by growth in top brands and pick up in marketing acitivies.ERIS continues to outperform its peers and IPM led by strong growth in Chronic products that contribute 75-85% revenues. Management guided for 1) New launches and better MR productivity to lead growth in FY22E 2) launch derma products with addition of new MRs within next 2 quarters and 3) will continue to outperform in covered markets and IPM. We continue to prefer ERIS as one of our top picks in mid-cap space due to 1) pure domestic play with insignificant regulatory and currency risk, 2) high contribution of chronic/sub-chronic products with steady demand structure, 3) strong balance sheet and 4) less dependenace on Chinese API and KSM.

Outlook

We maintain ‘BUY’(Unchanged) but derive at new TP of Rs666(earlier Rs671) due to marginal change in earnings estimate for FY23E.We value ERIS at 22x(Unchanged) PE of FY23E EPS of Rs31.