Shares of Eris Lifesciences have had a good past year the bourses. Analysts at Ventura think the stock can continue the good run forward.

The Eris Lifesciences Analyst: Analysts at Ventura initiated coverage on the stock with a “buy” rating and a 24-month-price target of ₹1,609. The target indicates an over 83% upside from the stock’s last closing price of ₹875.50.

The Eris Lifesciences Thesis: The brokerage said that Oaknet Healthcare has played a pivotal role in propelling ERIS Lifesciences Ltd (ERIS) to a formidable position within the dermatology sector, particularly evident in its robust organic growth during the initial year of FY23 post-acquisition. The analysts also highlighted that the company has further bolstered its presence through strategic acquisitions in 2023, including marquee brands from Dr. Reddy’s, Glenmark Pharma, and an ongoing deal with Biocon.

Eris recently acquired a 51% stake in Swiss Parenterals (SP), a dossier-driven generic and speciality injectables major, for a consideration of ₹637.5 crore. As per the brokerage, this acquisition not only diversifies Eris’ revenue streams but also unlocks export opportunities leveraging SP’s extensive distribution network in 80 markets worldwide, including the EU.

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Talking about the company’s biggest segment in terms of revenue composition, the diabetic care segment, the brokerage said that it is poised for robust growth driven by established brands like Glimisave, Cyblex, and Tendia, as well as promising new-age products such as Vildagliptin, Sitagliptin, and Dapagliflozin. Similarly, the cardiac care segment, accounting for 21% of revenue, is expected to mirror industry growth, supported by flagship brands like Eritel, LNBloc, Olmin, Crevast, and Atorsave.

Furthermore, ERIS has expanded its portfolio by acquiring 12 brands from Biocon in the nephrology segment, positioning itself to deliver comprehensive patient care, particularly considering the frequent nephrological complications experienced by its existing customer base in diabetic and cardiac care, the analysts added.

The analysts expect the company’s revenue to grow at a CAGR of 17.9% over FY23-26, reaching ₹2,764 crore. Additionally, EBITDA and net earnings are anticipated to grow at a CAGR of 22.9% and 15.5%, respectively, over the same period. EBITDA margins are expected to improve by 419bps to 36.1%, driven by better realizations from new products.

Price Action: Eris Lifesciences’ share price was up 1.17% to trade at ₹886.80 on Monday afternoon.

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