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Review By Dilip Davda on June 9, 2017
Eris Lifesciences Ltd (ELL) is a developer, manufacturer and commercializer of branded pharmaceutical products in select therapeutic areas within the chronic and acute categories of the IPM such as cardiovascular, anti-diabetics, vitamins, gastroenterology and anti-infectives. Company's focus has been on developing products in the chronic and acute category which are linked to lifestyle related disordeRs The chronic category of the IPM contributed 65.6% of ELL's revenues in Fiscal 2017. ELL is ranked 20th out of 377 domestic and multinational companies present in the chronic category of the IPM, in terms of revenues for Fiscal 2017 and the fastest growing company, in the chronic category, among the top 25 companies in terms of revenues, with revenue growth at CAGR of 28.9%, between Fiscals 2013 and 2017. The company generated 34.4% of revenues from the acute category of the IPM in Fiscal 2017 posting growth at a CAGR of 12.0% between Fiscals 2013 and 2017. Company's product portfolio comprised of 80 mother brand groups as of March 31, 2017. ELL's product portfolio is primarily focused on therapeutic areas which require the intervention of specialists and super specialists such as cardiologists, diabetologists, endocrinologists and gastroenterologists.
The company is coming out with a maiden IPO of 28875000 equity share of Re. 1 each as offer for sale from the existing stakeholdeRs The issue is being made via book building route with a price band of Rs 600-603 to mobilize Rs 1732.50 to Rs 1741.16 crore (based on lower and upper price band). Issue opens for subscription on 16.06.17 and will close on 20.06.17. Minimum application is to be made for 24 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. BRLMs to the issue are Axis Capital Ltd, Citigroup Global Markets India Pvt. Ltd and Credit Suisse Securities (India) Pvt. Ltd. Link Intime India Pvt. Ltd. is the registrar to the issue. The Company has reserved 150000 shares for employees and from the balance, 75% of the issue for QIBs, 15% for HNIs and 10% for Retail investoRs This offer is done to provide exit route to some of its existing shareholders and listing benefits.
On performance front, the company has reported (on consolidated basis) turnover/net profits of Rs 513.24 cr. / Rs 70.54 cr. (FY14), Rs 549.05 cr. / Rs 89.26 cr. (FY15), Rs 600.39 cr. / Rs 134.86 cr. (FY16) and Rs 744.07 cr. / Rs 241.90 cr. (FY17). Thus is has consistently shown improved top and bottom lines. Company's entire equity issued at par and has also issued bonus shares in the ratio of 10 for 1 in March 2009 and 9 for 1 in September 2016. Post issue it's paid up capital remains same at Rs 13.75 crore. Company's average EPS for the last three fiscal is Rs 13.12 and for the fiscal 17 is posted an EPS of Rs 17.61 (on consolidated basis). Based on it, asking price is at a P/E of 34 plus and P/BV of 15. Last three fiscal's average RoNW is 42.90. For the last five fiscals the company has posted CAGR of 14% in revenues and 33% CAGR in PAT.
Based on CAGR growth for last five fiscals of the top 35 companies, ELL is the second company in the IPM with a CAGR of 21.7%, 1st in Chronic Category with a CAGR of 28.9%, 3rd in cardiovascular Therapeutics as well as Anti-Diabetics Therapeutics with 25.8% and 34.5% respectively. ELLs top 10 brands contribute 75% of the total revenue. The company has partner with 20+ players and has contracts ranging from 1 to 3 yeaRs It is the first fastest growing company in chronic segment and second fastest growing company in IPM. However, on the basis of pricing, it appears to be fully priced offer discounting near term performance, but the company is poised for a leap forward as it has created a niche place in the segment it operates and enjoys most preferred partner. ELL plays in the domestic market only which is a world's capital for the above named illness and thus is a large market.
On merchant banker's front, 3 BRLMs associated with the offer have handled 27 public issues in past three years out of which 6 issues closed below the issue price on the listing date.
Note: Eris Lifesciences is offering discount of Rs 60 per share to eligible employees.
Conclusion: Investors may consider investment for medium to long term in this niche player having better penetration.
Review By Dilip Davda on June 9, 2017
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Eris Lifesciences Limited offers an early investment opportunity in Eris Lifesciences Limited. A stock market investor can buy Eris Lifesciences IPO shares by applying in IPO before Eris Lifesciences Limited shares get listed at the stock exchanges. An investor could invest in Eris Lifesciences IPO for short term listing gain or a long term.
Read the Eris Lifesciences IPO recommendations by the leading analyst and leading stock brokers.
Eris Lifesciences IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Eris Lifesciences IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Eris Lifesciences IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Eris Lifesciences IPO.
The Eris Lifesciences IPO allotment status will be available on or around June 23, 2017. The allotted shares will be credited in demat account by June 28, 2017. Visit Eris Lifesciences IPO allotment status to check.
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