Eris Lifesciences Ltd. delivered an inline Q2 FY24 operational performance. The profitability of its acquired businesses (Oaknet, Glenmark brands and Dr. Reddy Laboratories Ltd. brands) improved to company level in H1 FY24.
The recent acquisition of Biocon’s business enables Eris to make in-roads in Nephrology and expand its derma offerings. In the past 12 months, Eris spent about Rs 16 billion in total on acquisitions.
We maintain our estimates for FY24/FY25. The acquisition of Biocon business is expected to be earnings neutral in FY25. We continue to value Eris at 23 times 12 months forward earnings to arrive at a target price of Rs 930.
In addition to its core therapies of anti-diabetes, cardiology and vitamins-minerals and nutrients, Eris has enhanced its presence in dermatology and nephrology through acquisitions, thereby expanding its overall offerings in the branded formulation space.
The current valuation adequately factors in the upside in earnings. Hence, we maintain our ‘Neutral’ rating on the stock.