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Motilal Oswal Report
We change our earnings estimates of Eris Lifesciences Ltd. by (-6%)/4% for FY25/FY26 to account for the acquisition and the increase in interest outgo in FY25. We assume reduction in net debt in FY26 on the back of free cash flow generation.
We value Eris at 22 times 12-month forward earnings to arrive at a target price of Rs 930. Eris has been aggressively expanding its product portfolio/therapy presence through merger and acquisition for the past 12-15 months. With total investments of Rs 35 billion till date, it has diversified into dermatology, nephrology, and women's healthcare.
The latest acquisitions would enhance the company's diabetes offerings in injectable dosage and add MABs in the oncology space. Now that the offerings are considerably expanded, scaling up the acquired business and improving the profitability of its overall business would be vital for Eris in the medium term.
We maintain our Neutral rating on the stock.
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