Hi…
It was available on company website a few days ago. Now, even I can’t locate it.
Hi…
It was available on company website a few days ago. Now, even I can’t locate it.
Q1 results from Eris Lifesciences. Prima facie, results look mixed.
However, company has guided for 30 pc revenue and 16-17 pc EBITDA growth for FY 23. Will have to listen to concall to figure out where is such confidence emanating from.
Disc: invested, biased.
I was on the call, most growth is coming from Oaknet acquistion (contribution will be ~185 cr. to Eris in FY23). Also, a few of their products are doing very well (zomelis crossed 100 cr. runrate, CNS is growing at 20%+, Insulin portfolio should do 20 cr. annual revenues, and they have 15+ launches planned this year). Margin wise, it will be a soft year. They are guiding for margins reverting to 36% by FY25.
Disclosure: Invested (position size here, no transactions in last-30 days)
Thanks for the prompt reply. One doubt that I have… In Q1, Oaknet’s contribution was only 31 cr ( as per investor PPT ). Doing 185 cr for full FY from Oaknet looks like a tall ask.
Did the management throw any light on this?? Is the Oaknet business showing increased momentum in Jul-Aug etc??
Thanks in advance.
Quarterly run-rate of Oaknet is actually 55 cr., only 31 cr. was accrued to Eris in Q1 as the acquisition was done in early May 2022 (so 24 cr. did not accrue to Eris). Management is guiding that 55 cr. quarterly sales look sustainable, if thats the case for the full year Eris should get 31+55*3 ~ 196 cr. So 185 cr. is doable if Oaknet maintains the runrate.
FY23Q1
Disclosure: Same as before
This sounds like a catastrophic news for Domestic branded generic players.
Requesting views form better informed Forum members.
Very insightful interview, management covers their diabetes and CV launches along with the rationale for Oaknet acquisition. Also, they mention that current rules will mostly impact trade generic companies.
Company came up with reasonable results, Oaknet business has turned around faster than earlier guided and is already doing 24% EBITDA margins. Management is guiding for 30% sales growth and 16-17% EBITDA growth in FY23. Recovery in cardiovascular division is the reason behind the confidence. Concall notes below.
FY23Q2
Disclosure: Invested (position size here, no transactions in last-30 days)
Descent set of Q3 results. Most of the growth attributable to the acquired portfolios in the last 1 yr. PAT is flat despite steep rise in Consolidated Revenues due to higher depreciation, amortisation and employee expenses that come with acquisitions.
Key positive - Acquisition of Derma portfolio of Glennmark Pharma for 340 cr. The portfolio’s last yr sales were at 87 cr. Combined with Oaknet’s ( a Derma Formulations company ) acquisition last yr, Eris is now becoming a serious branded derma player in India. Should be a long term positive.
Disc : holding a tracking position. Biased.
Company came up with mixed set of results (27% sales growth, flat PAT YOY). Organic growth lagged due to loss in sale of 2 molecules, one due to legal issue and other was a covid product. Oaknet has turned out to be a very good acquisition, and this has given them the confidence to acquire 9 derma brands from Glenmark. Concall notes below.
FY23Q3
Disclosure: Invested (position size here, bought shares in last-30 days)
Eris Lifesciences Q3 concall highlights -
Acquired 09 Dermatology brands from Glennmark Pharma
Had acquired Oaket Pharma ( a Derma company ) in May 22
Latest acquisition helps them consolidate their position in Derma Mkt, specially in anti fungal and anti psoriasis mkt
03 of Glenmark’s acquired brands are No1 in their respective segment. 03 others are among top 03
These 09 brands have a revenue base of 85 cr, Acquired for 340 cr, funded via borrowings @ 8pc
Post deal derma contribution for Eris will rise to 13 pc from 07 pc currently
Derma mkt rank to improve to No 6 from No 12 Oaknet’s
Q3 revenues at 60 cr, EBITDA at 27 pc up from 10 pc, pre acquisition
Oakent to clock yearly EBITDA > 50 cr, 1 yr ahead of expectations
Cardio-Metabolic share of revenues for Eris at 54 pc, grew by 15 pc
Eris’s biggest anti-diabetic brands are Zomelis and Gluxit
Derma+CNS+Women’s health - The emerging portfolio for Eris has grown by 15 pc. All three combined form 25 pc of Eris’s revenues
VMN (Vit-Minerals-Neutraceuticals) account for 17 pc of Eris’s revenues. Grew by 19 pc
Added 200 Medical Reps in FY 23
Launched various new and innovative products specially in Cardio-Metabolic space
These led to some compression in Gross Margins
Consolidated sales at 424 cr, up 27 pc
EBITDA at 132 cr, up 12 pc
PAT at 100 cr @ 24 pc net margins!!!
Consolidated EBITDA margins at 32 pc despite Oaknet integration, commissioning of new mfg plant in Gujarat and various new brand launch related investments
Margins to improve next FY onwards
All this growth despite base Qtr having an aprox sale of 10 cr of Covid drugs
Started selling ( new launch ) Insulin this yr. Aim to hit 22-24 cr sales this yr, 50 cr next yr
Currently having aprox 3000MRs. Oaknet may add a few more next yr
Next yr onwards, EBITDA growth to be better than top line growth as most investments are behind
Aim to launch Glargine by Q3 - Q4 next yr
Current consolidated yield of MRs at Rs 5lakh/month
May go for more inorganic opportunities next year as well
No of products going off patent and are likely to be launched next yr in India are quite high in the diabetes space
Disc : holding, biased
Eris’s 7 % revenue is coming from the products which are now come under NLEM policy of government of India. The margin in these products will be declined by 15- 20 %. So overall margin of company may declined 1-3 % in coming quarters. I’m not yet invested but waiting for some price correction to enter.
Eris does another acquisition in derma space, this time valuations paid were quite high (5.5x sales). Call notes below.
16.03.2023
Disclosure: Invested (position size here, no transactions in last-30 days)
The question that comes to mind is why glenmark and drl selling despite being in leadership positions in the segment.
Low base
Low growth
Separate mr team
Are possible reasons that come to my mind, leading to a lower ROE.
04.05.2023 India Ratings notes
Disclosure: Invested (position size here, no transactions in last-30 days)
Muted set of nos continues for Eris, with organic growth at 9.5%. However, their big brands such as Glimisave, Eritel, etc. have finally started growing after a gap of 2-3 years. Management is very confident of recouping margins in FY24 and is looking to pay down 400 cr. of debt in FY24.
FY23Q4
Disclosure: Invested (position size here, no transactions in last-30 days)
Is there cyclicality in this business? Usually, Q4 is lower than Q3.
Eris Lifesciences Q4 highlights -
Revenues at 403 vs 306 cr
EBITDA at 119 vs 97 cr
EBITDA margins at 30 vs 32 pc
PAT at 61 vs 80 cr (due higher interest outgo, higher amortisation, lower other income - all due aggressive inorganic acquisitions made by the company in FY 23)
Consolidated revenue growth for Q4 and FY 23 at 32 and 25 pc
Standalone ( organic business ) revenue growth for Q4 and FY 23 at 11.5 and 9.5 pc
Consol Debt at 774 cr. Expect accelerated pre-payments in FY 24 due generous cash flow generation
Oakent business ( Derma focussed company, acquired early LY) -
Revenues at 250 vs 195 cr, up 23 pc ( for full FY )
Generated EBITDA of 61 vs 20 cr YoY
Added complementary brands to this business by acquiring medical and cosmetological brands of Glenmark, DRL in FY 23
Oaknet’s MR productivity increased from 2.3 to 3.2 lakh / month. EBITDA expanded from 10 to 24 pc
Basically - a very sucessful turnaround of Oakent under Eris
Eris Life - therapy wise revenue share -
Diabetic- 29 pc
Cardiovascular- 21 pc
Vit & Minerals- 16 pc
Derma- 14 pc
CNS- 7 pc
Women Health- 5 pc
Others- 9 pc
Revenue wise Brand strength -
4 brands > 100 cr revenues
6 brands > 70 cr revenues
5 brands > 50 cr revenues
Added 200+ MRs in FY 23
Total cost of acquisition of Oaknet +Derma brands of DRL and Glennmark at 1265 cr incurred in FY 23
Consolidated gross margins sustaining at 80 pc !!
With Oaknet scale up and higher sales of Injectable Insulins, expect improvement in Gross, EBITDA margins in FY 24!!
Eris MJ (JV) for oral insulin hit 17 cr revenues for FY 23. Could have been higher but for supply issues in Q4
Going to launch a number of new formulations in FY 24. Even after accounting for these launches, expect significant jump in EBITDA margins in FY 24
Currently all Derma formulations being made by third parties. Intend to bring them in-house in their new Gujarat facility
Top 20 brands account for 70 pc of revenues
Effective tax rate should be around 14-15 pc this yr
Intend to pay back 400-500 cr of Debt this yr
Business Matrix improvements should be visible from Q1 FY 24 onwards
Going to add aprox 100 MRs in H2 FY 24 in Oaknet division
Disc: holding a tracking position, biased
Once the topline growth starts translating into bottomline growth, I personally expect a significant re-rating in the stock price … something similar to JB Chemicals
That a hunch
Do ur own homework before investing