Buy Eris Lifesciences; target of Rs 730: Axis Direct

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Axis Direct's research report on Eris Lifesciences

Eris has a unique positioning in the India Pharma market. It is 100% into domestic formulations and the 2nd fastest growing (22% CAGR % over FY13-17) among the top 35 pharma companies in India. Eris is ranked 32nd despite being a relatively new entrant (established in 2007). Its key focus is on high growth high margin chronic segment (65.6% of revenue vs. 52% in FY13) – its strategy to create strong prescription-led brands ensures higher MR^ productivity and continues to drive operating leverage. Given strong FCF generating business model and net cash, we expect M&A in its therapeutic gaps to add to the above industry growth expected in its base business.

Outlook

we initiate coverage with BUY and TP of Rs 730 (24xFY19EPS). At CMP ,the stock trades at 24x FY 1 8E EPS of Rs 24.3 and 19.4x FY19E EPS of Rs 30.4.

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