Eris Lifesciences Q3 Results Review - Margins Inline; Miss In Revenue: Nirmal Bang

Nirmal Bang Report

Eris Lifesciences Ltd.’s Q3 FY23 results missed our estimate on the revenue front although margins came inline with estimates. Consolidated revenue grew by 27.4% YoY to Rs 4.2 billion (our estimate: Rs 4.5 billion), led by consolidation of Oaknet.

Standalone revenue grew at a slower pace of 5% YoY to Rs 3.3 billion, which was mainly due to discontinuation of Zayo and Zac-D brands.

Excluding these brands, growth in the standalone business was strong, driven by robust growth in Cardio-Diabetology and Women’s Healthcare segments, led by continued growth in Zomelis, Gluxit and Drolute brands.

Consolidated Ebitda margin stood at 32.4%, in line with our estimate. Margins are expected to improve from here on mainly on the back of:

1. reduced losses in the Insulin segment (expected to reach breakeven in FY24),

2. improvement in Oaknet margins and

3. operational leverage, especially driven by scale-up in new launches.

Consolidated net profit was almost flat YoY at Rs 1.0 billion (our estimate: Rs 1.1 billion). Post Oaknet, Eris Lifesciences has now acquired nine dermatology brands from Glenmark Pharmaceuticals Ltd. to further strengthen its dermatology portfolio.

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