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Motilal Oswal Report
Eris Lifesciences Ltd. reported an in-line Q3 FY24 performance. Core therapies (63% of revenue) outperformed the industry by 300 basis points YoY for the quarter. Eris Lifesciences has announced that it is venturing into injectable products by acquiring Swiss Parenterals Ltd.
Further, this acquisition marks the beginning of the exports business for Eris. Considering Swiss Parenterals' FY24 sales of Rs 3.4 billion, the deal is valued at enterprise value/sales of 3.7 times. Moreover, considering 30- 35% margin, the EV/Ebitda stands at 10.6 times-12.4 times.
We raise our earnings estimates by 3%/2% for FY25/FY26, factoring in:
The addition of business from Swiss Parenterals, and
Improving gross margin in the Biocon portfolio.
We value Eris at 23 times 12 months forward earnings to arrive at our target price of Rs 950.
Reiterate 'Neutral'.
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