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Weak quarter

Eris Lifesciences’ (ERIS) Q4FY26 EBITDA was below our estimate (INR 2.7bn; up 8.4% YoY). Though FY26 revenue growth (up 8% YoY) was muted; we see improvement from FY27E with Sema launch in India, export recovery and supply normalization in insulin franchise. Recent observations for Swiss parental’s plant will have an impact on EU CDMO business which will get pushed to FY28E. Eris has opted for inorganic route to diversify and scale up existing portfolio. This has been implemented without diluting margins. We expect margins to remain healthy at current level of 36% as commercial manufacturing start from Bhopal facility along with scale up in export business. The company has multiple growth levers such as broad-based offerings in the derma segment, tapping GLP-1 market, demand supply mismatch in insulin segment, creating large injectable franchise across India and RoW market and benefits of operating leverage. Our FY27 and FY28E EBITDA stands cut by ~3%. We maintain ‘BUY’ rating with revised TP of INR 1,750 (valuing at 17x EV/EBITDA on FY28E).

Single digit revenue growth YoY:

ERIS reported revenue growth of 7% YoY to INR 7.5bn, below est. Segment wise domestic formulations including Biocon business grew by 11% YoY while Swiss parenteral remained muted down 8% YoY. Delay in shipment impacted the quarter

EBITDA margins at 36.2%:

EBITDA came in at INR 2.7bn (up 8.4% YoY) we est INR 3bn. OPM improved both YoY and QoQ at 36.2%. Domestic business formulation margins stood at 36.5%. Swiss parental margins at 32.5% in Q4FY26. Overall GMs declined by 35bps YoY but was up 317bps QoQ to 75.5%. Other expenses remained flat YoY. There was tax write back to the tune of INR 1.2bn in Q4FY26. Resultant PAT came in at INR 2.8bn. Adj for tax PAT stood at INR 1.6bn.

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SEBI Registration No. INH000000271Accumulate Paradeep Phosphates Ltd For Target Rs.141 by Prabhudas Liladhar Capital Ltd