Eris Lifesciences (ERIS) posted lower-than-expected 4QFY25 performance. This has been largely due to a marginal slip in the execution, particularly in the insulin revenue. Organic base business grew 10% YoY. The acquired (Biocon-2) business exhibited 11% YoY growth on a like-to-like basis. The Swiss parenteral business ended FY25 with a revenue/EBITDA margin of INR3.3b/33.5%. We cut our earnings estimates by 5%/3% for FY26/FY27, factoring in 1) recombinant human insulin (RHI)-related supply issues, 2) gradual pick-up in utilization of the Bhopal facility, and 3) gradual move to alternate prescriptions because of certain fixed-dose combninations (FDCs) being banned by regulatory authorities.
OutlookWe value ERIS at 25x 12M forward earnings to arrive at our TP of INR1,350.
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