Eris Lifesciences Upgraded to Buy Rating with a Price Target of ₹1,750: Prabhudas Lilladher
Eris Lifesciences' Q4FY26 EBITDA Falls Short of Estimates
Eris Lifesciences' (ERIS) Q4FY26 earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at INR 2.7 billion, marking an 8.4% year-over-year increase. However, this figure was below the expectations of Prabhudas Lilladher's research team.
Despite a muted 8% year-over-year revenue growth in FY26, the research firm is optimistic about the company's prospects in FY27. The upcoming launch of Sema in India, along with export recovery and supply normalization in the insulin franchise, are expected to drive growth. However, the impact of recent observations on the Swiss parent's plant will likely delay the EU CDMO business until FY28E.
Eris Lifesciences has chosen to diversify and scale up its existing portfolio through inorganic means, a strategy that has been implemented without compromising on margins. The company's margins are expected to remain healthy at 36%, driven by the commencement of commercial manufacturing at the Bhopal facility and an increase in export business.
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Key Growth Levers for Eris Lifesciences
The company has identified several growth levers, including broad-based offerings in the derma segment, tapping the GLP-1 market, addressing demand-supply mismatches in the insulin segment, creating a large injectable franchise across India and the rest of the world, and benefiting from operating leverage.
Revised Outlook and Rating
In light of these developments, Prabhudas Lilladher has revised its FY27 and FY28E EBITDA estimates downward by around 3%. The research firm maintains a 'BUY' rating on Eris Lifesciences, with a revised target price of INR 1,750, which values the company at 17x EV/EBITDA on FY28E estimates.
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Comparison of EBITDA Estimates
| Year | Original Estimate | Revised Estimate | Change |
|---|---|---|---|
| FY27E | -3% | ||
| FY28E | -3% |
Note: The original estimates are not provided in the original text. However, the revised estimates are mentioned as being cut by ~3%.
Investor Takeaway
Investors should consider Eris Lifesciences for its potential growth levers and healthy margins.
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