The Eris Life Science Ltd was incorporated in the year 2007. They develop, manufacture pharmaceutical products in select therapeutic areas within chronic (diseases that are prolonged in duration) and acute categories (disease of short duration and recent onset) of the Indian Pharmaceutical Market (IPM), such as- cardiovascular, anti-diabetics, vitamins, gastroenterology and anti-infectives. During Fiscal 2017, the company’s chronic category in the IPM contributed 65.6% of the total revenue whereas acute category contributed 34.4% of the total revenue of the company. The growth in revenue, at a CAGR of 21.7%, between Fiscals 2013 and 2017 has outperformed overall IPM growth, at a CAGR of 11.8%, during the same period. The revenue growth in chronic category of Eris was 28.9% CAGR which has outperformed the IPM with only 14.3% CAGR during Fiscal 2013-2017 whereas revenue growth for acute category was 12% for Fiscal 2013-2017. Eris is the fastest growing company in chronic therapy amongst the top 25 companies and the 2nd fastest growing company in Cardiovascular and Anti-Diabetics therapeutic segment amongst the top 25 companies.
Objective of Issue-
The IPO is an Offer for Sale i.e., the funds will not be received by the company and the objects of the Offer are-
- To achieve the benefits of listing the Equity Shares on the Stock Exchanges
- For the sale of up to 2,88,75,000 Equity Shares (21% of total paid-up Capital) by the Selling Shareholders.
Eris Lifescience Ltd has shown good performance in terms of revenue and PAT growth i.e., CARG of 14.03% and 38.57% respectively. And has outperformed the IPM growth rate of 11.8% CARG, during same period.
Valuation and Ratios-
Considering the financial statement as on March 31, 2017 and Offer Price at the upper band –
The valuation of Eris Lifescience Ltd seems to be slightly at a premium due to strong balance sheet, debt free company, growth rate of the company, good prospect of the segment selected by the company (products linked to lifestyle related disorders which is increasing due to poor lifestyles).
We recommend subscribe rating for Eris Lifescience Ltd for long term investors.