4 ERIS share price target reports by brokerages below. See what is analyst's view on ERIS share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
1QFY21 revenue was in-line but gross and EBITDA margin were lower by 300bps and 330bps YoY due to launch of low margin OTC products and increased employee expense by 21% YoY led by addition of new MR’s. Contribution of the new MRs is lower than expected as new launches are rescheduled on later dates for better traction among target clientele. The ongoing COVID related headwinds have delayed launches of new brands while its current portfolio of cardio-metabolic brands gained market share and outgrew industry growth. We continue to prefer ERIS as our top pick in mid-cap space due to 1) pure domestic play with insignificant regulatory and currency risk, 2) contribution of chronic/sub-chronic products with steady demand structure, 3) strong balance sheet and 4) less dependenace on Chinese API and KSM. We maintain BUY recommendation and retain TP of Rs576 based on PE 21x of FY22E
We continue to prefer ERIS over other mid-cap companies due to 1) pure domestic play, very limited regulatory and currency risk, 2) contribution of chronic/sub-chronic products with consistent demand structure and 3) strong balance sheet. In FY20, ERIS had been in expansion mode by launching off-patent molecules, foray in new therapeutic and trade generics, in-licensing molecules and added new headcounts. However benefit from this expansion is yet to yield benefit and has led EBITDA margin to declined to 28-30% in 2HFY20 versus 37-38% in 1HFY20 mainly on account of marketing expense and increase in MR count. We have increased our earnings estimates for FY21E and FY22E by 6% post encouraging growth in top-10 brands, better gross margin (85%) in Q4FY20 and management guidance. Maintaining PE 21x of FY22E earnings, our new TP is Rs576 (previous Rs547) and we also change our rating to ‘Accumulate’ (earlier BUY) due to recent rally in stock price.
While its application new strategies gains only gradual traction vs. market expectation of better outcome of growth and margin in H2FY20E, we believe that its growth visibility and margin stability to be better off in H1FY21E. Though launching new molecules through in-license agreement as well as promotional expenditures may impact headline margins in near term, ERIS management is confident to achieve better traction of volumes and improve return ratios.We have reduced our earning estimate for FY21E and FY22E by 21% on account of reduction in EBITDA margin due to higher SG&A and other operating expense on account of launch of new products.We rolled forward our earnings estimates to FY22E and derived PE 17x (earlier 16x) of FY22E earnings with 30% premium to its earnings CAGR (FY20E-22E) of 13.4%. Our new TP of Rs522 (v/s old TP Rs458) PE of 17x of FY22E earnings. We maintain ‘Accumulate’
We met the management of ERIS and came out confident on its growth plans. Eris plans to change its gear from defensive approach (In FY18 and 19) in India formulations with plans to expand franchisee of current portfolio, launches off-patent molecules, foray in new therapeutic areas, acquisitions of brands, in-licensing molecules and additions of new headcounts. With CNS portfolio return to growth path along with aggressive launches and superior MR productivity, our revenue assumptions discounted visible growth levers and discount in earnings growth 15% CAGR in FY19-21E. We maintain our recommendation ‘Accumulate’ and retain TP Rs459.
With 58% contribution of Guwahati plant in revenues, ERIS guided for more capacity utilisation including producitons of Strides portfolio. This helps for better tax management with guidance of 8-10% in FY20E. Guwahati remains to be tax benefit zone till FY24E. With better traction of new products/brands, incremental Rx and net cash position, we expect stronger cash flows and higher return ratios. With stability of sales from the acquired portfolios and better visibility of earnings, we maintain ‘Accumulate’ and retain TP at Rs459 We maintian ‘Accumulate’ recommendation.
We expect sales at 16% CAGR in FY19-21E while management guided 30-50% more than the average growth of IPM and EBITDA to be rangebound, alluding to be around 34-37%. With Guwahati plant contribution in operating revenues at 61%, the management guided for more capacity utilisation to manufacture more products from Strides portfolio. This helps for better tax management with guidance of 8-10% in FY20E. Guwahati remains to be tax benefit zone till FY24E. With better traction of new products/brands, incremental Rx and net cash position, we expect stronger cash flows and higher return ratios. With stability of sales from the acquired portfolios and better visibility of earnings, we maintain ‘Accumulate’ and retain TP at Rs459 on PE 16x of FY21Eearnigns. We maintian ‘Accumulate’.
We expect 20% YoY growth in Q4FY19E and 19.4% growth in FY19E while seasonal destocking to decrease EBITDA margin to 32.2% in Q4FY19E and result in 35.7% margin in FY19E. While Guwahati plant utilisaiton rate is 60%, the management guided for more capacity addition to manufacture more products from Strides portfolio. This will lead to better tax management as Guwahati being a tax benefit zone. With better traction of new products/brands as well as generation of incremental Rx, we expect stronger cash flow, lower debt and higher return ratios. With stability of sales from the acquired portfolios and better visibility of earnings, we incorporate earnings estiamtes of FY21E as well as adjust our new TP to R695 on PE 26.5x of FY21E earnigns. We maintian ‘Accumulate’.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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