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Prabhudas Lilladher Report
Eris Lifesciences Ltd. acquisition of nine derma brands from Dr. Reddy laboratories Ltd. along with recent acquisition of brands from Glenmark Pharmaceuticals Ltd. will provide them comprehensive offerings in dermatology.
In the near term, this acquisition will increase Eris net debt and we see this acquisition as earnings per share dilutive.
We downgrade our FY24E and FY25E EPS estimates by 9% and 3% each, given higher depreciation and interest cost.
The company has multiple growth levers such as broad based offerings in derma segment, opportunities in cardio metabolic market with patent expirations and benefits of operating leverage, as revenue scales up from these acquisitions which is currently operating at sub optimal profitability.
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