Eris Lifesciences Plans Fresh Launches, Revenue Up 28%, Buy Stock For 15% Upside: Prabhudas Lilladher

Prabhudas Lilladher, a top brokerage firm suggests investors to buy the stock of Eris Lifesciences. The brokerage firm said, "We believe benefits of operating leverage will play out, as revenue scales up from these launches. The further acquisition of Oaknet gives Eris an entry in the derma segment, currently operating at sub-optimal profitability."

Stock To Buy: Target Price

The Current Market Price (CMP) of Eris Lifesciences is around Rs. 736. Prabhudas Lilladher has estimated a Target Price for the stock at Rs. 850. This stock has the potential to give a 15.48% return, in the upcoming 1 year. It is a mid-cap stock with a market capitalization of around Rs. 9,945 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 736
Target Price	Rs. 850
Potential Upside	15.48%
52-week high share price	Rs. 835
52-week low share price	Rs. 600.30

Strong financials

Eris Lifesciences (ERIS) reported moderate operating profit (up 5% YoY), due to higher promotional expenses from new launches. ERIS grew by 19% YoY vs IPM growth of 13% in 2Q as per AIOCD. Revenue grew by 28% YoY to Rs. 4.6bn in-line with our estimates aided by Oakanet consolidation.

Stock Upside

Giving a buy rating, Prabhudas Lilladher stated, "Eris's turnaround of Strides acquired portfolio provides comfort for similar execution. Further, the company continues to outperform cardio metabolic market (60% of its total revenues) which expects robust growth over next 3-4 years with wide patent expiration opportunities. We maintain our 'Buy' rating at target price of Rs. 850, valuing 16x EV/EBITDA on Sept FY24E."

Growth momentum in Q2 FY23

Oaknet deal turned out well and continued growth momentum in Q2FY23. Management is confident about achieving EBITDA of Rs. 500mn in FY23 which is one year ahead of expectation. ERIS expects market to grow by early to mid-teen growth rate with 5-6% from new products, 4-5% from price increase and 3-4% from volume growth. The brand Zomelis and Gluxit group sustained its growth rate and improved its monthly sales run rate by Rs. 90mn / Rs. 50mn and expects to grow faster than the legacy products.

New launches

Eris has planned for more than 15 new launches in FY23 including 5-6 significant launches and also lined up an interesting Derma-Cosme pipeline for launch starting Oct '22. ERIS expects Rs. 180-200 mn revenue in FY23 from its human insulin portfolio which will scale-up quickly with the schedule launch of Xglar (Glargine in-licensed from Biocon) in Oct'22.

Disclaimer

The above stock was picked from the brokerage report of Prabhudas Lilladher. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.