Buy Eris Lifesciences; target of Rs 870: Motilal Oswal

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26 Aug, 2025 12:21

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We initiate coverage on Eris Lifesciences (ERIS) with a BUY rating and a target price of INR870. In just 14 years (founded in CY07), ERIS has built a pure-play Branded Formulation business, with a revenue of INR13b (12M ending Sep'21). Notably, its PAT has nearly doubled to INR3.5b during FY16-21. ERIS ranks among the Top 25 Indian companies in revenue terms. ERIS has presence across the value chain in developing, manufacturing, and marketing of branded pharma products in select Chronic therapies (the fastest growing company in Chronic category), such as Anti-Diabetes (AD; 37% of sales), Cardiac Care (31% of sales), and Vitamins/Minerals/Nutrients (VMNs; 23% of sales). We expect a 17% earnings CAGR for ERIS over FY21-24 versus marginal earnings growth during FY18-21, driven by: a) higher scope of penetration of technically superior drugs in AD therapy (adding Insulin-analogs to the AD portfolio), b) its efforts to improve the coverage of super-specialists/high-end consulting physicians across therapies, c) better operating leverage on improved MR productivity, and d) higher in-house manufacturing.

We ascribe a three-year industry average P/E multiple of 22x on 12M forward earnings to arrive at our TP, which implies 27% upside from current levels.

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