Buy Eris Lifesciences; target of Rs 780: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Eris Lifesciences (ERIS) acquisition of nine derma brands from Dr Reddy along with recent acquisition of brands from Glenmark will provide them comprehensive offerings in dermatology. In the near term, this acquisition will increase ERIS net debt and we see this acquisition as EPS dilutive. We downgrade our FY24E and FY25E EPS estimates by 9% and 3% each, given higher depreciation and interest cost. The company has multiple growth levers such as broad based offerings in derma segment, opportunities in cardio metabolic market with patent expirations and benefits of operating leverage, as revenue scales up from these acquisitions which is currently operating at sub optimal profitability.

We maintain our ‘BUY’ rating with revised TP of Rs780 (Rs850 earlier), valuing 14x EV/EBITDA on FY25E.

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