@zygo23554, are you still following this company? Above were really interesting observations, have you found out the reason and sustainability of the high margins? Pls do share your thoughts whenever possible.
While googling got this link.
This is a news about a pottential drug discovery by sree chithira tirunal institute.
Just a wild guess⌠could the industry partner they are mentioning is Eris life science??? Just a wild guessâŚ
Eris is misguided in initiating a buyback at 7 times book and 27 times earnings. Buybacks are to be initiated only when the share price is extremely low. Hope the buyback tax will act as a discouragement to such practices. When the share price is low, a buyback will be attractive even with a buyback tax. Eris is a great company with poor capital allocation.
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One good thing is promoters are not participating in the buybacks. I think the amount is not too much only 100cr. Its more a signal that they think the stock is undervalued and a sentiment booster. They are already debt free having pre-paid all term loans in the recent quarter and maybe no use of the free cash flow currently. So its good to return capital to shareholders either through dividends or buybacks. I will not go so far to say they have poor capital allocation.
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Returning capital back is never good for the best investors. The signal they have given to the market is not very good. It implies that they have run out of ideas and the stock price does not justify the high premium. By not participating in the buyback, management implies that they themselves know not what they do. Returning all free cash through dividends or buybacks implies that you no longer want to grow. Even if the company decides to return all the cash, the 350 odd crores so returned would be a pittance when compared to the market cap of 6800 crores. Stock deserves a derating. Better to pick it up cheaper.
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Whole USA market is supported by buybacks from the likes of Apple and other great companies. Lets agree to disagree.
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Perhaps the stock price speaks better. You are right not because the world agrees with you, but you are right if your facts are right. Would you want the company to return your money as dividends so that you can buy the share at sub 400 levels, or do you want the company to use your 
and buy back at an inflated price of 575.
Stock price is falling because market is anticipating that the buyback would be called off in light of the increase in buyback tax.
I donât think you can call 575 as an inflated price. The stock was even above that levels few months back and if you thought it is inflated, why didnât you sell in the open market. Any day I would prefer buyback at reasonable valuations, where promoters do not participate, so that the EPS increases due to reduction in number of shares.
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Apologies for the delayed response.
Havenât really spent time getting to the depth of it. Generally 2-3 negatives (in my book, not necessary that others agree to these) are enough for me to give any story a skip. Abnormally high margins, questionable acquisition from a questionable company (once again subjective assessment) and some debatable capital structuring pretty much ruled it out for me.
However I do track this story and price action from time to time to get some feedback on whether my hunch (since I havenât done enough detailed work) is right or misguided
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The extent of overvaluation is yet to be seen, and the market has to adjust the share price nearer to that of a bond. The share should come to 300 levels. Future depends on the growth and clearance of the regulatory overhang.
Which regulatory overhang you are talking about?
One has to watch out for price controls and movement from branded to generics.
Doesnât seem like falling much more. Purchased today and now 10% of my portfolio. Return on tangible assets is something like 
% and the fastest-growing pharma company in the past 10 years.
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Eris Lifesciences announced the acquisition of the trademark for anti-diabetes novel drug Zomelis from Novartis AG for US$ 13 million, as per the companyâs press release. This acquisition is only for the Indian market.
The sale of the product by Eris Lifesciences, which is an Indian drug maker, will begin from December 10 in the Indian market, the company said.
Zomelis, commonly known as vildagliptin, is used in treatment of type 2 diabetes. This is the first innovator pharmaceutical product trademark acquisition by Eris Lifesciences.
âThe acquisition of Zomelis will help us strengthen our position in the diabetes care market in India. Our inorganic growth strategy continues as we explore good opportunities to strengthen our product offering for patients,â said Eris Lifesciences chairman and managing director Mr Amit Bakshi.
Earlier, the company has done four acquisitions and among those the buyout of Strides Shasunâs branded business portfolio for Rs 500 crore (US$ 72 million) in December 2017 was a major one which assisted the company to gain a foothold in the central nervous system drug segment.
Eris Lifesciences was founded in 2017 and is among the top 10 players in the anti-diabetes drugs segment in the Indian Pharmaceutical Market, as per the data by market research firm AIOCD-AWACS for October.
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Haitong Securities: With superior profitability, strong free cash flow generation and 35 per cent return on invested capital, Erisâ financials are comparable to its MNC peers.
Read more at:
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Promoter holding has increased from 54.08 to 54.23 and very good set of nosâŚ
*Eris Lifesciences â Q4FY21 Concall Update
The stock is trading 22.6xFY22E consensus earnings
⢠Revenues grew by 11.9% to Rs 278 cr
⢠Launched 2 products in Q4 â Zayo (brand for Sacubitril and Valsartan) and Bricet
⢠After a gap of several years, the company launched more than 10 new products, including combinations in FY21. The company is likely to launch 10plus products in FY22 as well
⢠Gross margins were lower at 78.3% vs 87.1% in Q4FY20, due to additional costs of new product launches without ramp up yet. Also, due to higher contribution from third party manufacturers, the gross margins were lower. the management expects improvement in gross margins from Q1FY22 onwards as new products ramp up in scale and as contribution from Gwalior facility increases
⢠However, EBITDA margins improved by 290 bps to 34% on the back of 15% increase in MR productivity and pandemic driven cost savings
⢠The yield per man per month for the standalone operations increased to Rs 4.5 lakhs per month, up from Rs 3.9 lakhs per month in the last year
⢠FY21 was a game changes for the company; had 5 significant product launches during the year â Gluxit (have exit rate of Rs 2.5/month runrate sales in Marchâ21), Zac D (combination of Vitamins A, C and D), Rivalto, Bricet and Zayo
⢠Zomelis, the Vildagliptin brand acquired in December 2019, has grown by nearly 4.5x in sales run rate since acquisition. Its market share has increased from 7.3% in Decâ19 to 10.9% in Marchâ21. It has an exit sales run rate of Rs 4.4 cr/month in March. It is still in growth phase anad likely to do Rs 50 cr+ sales in FY22
⢠Going Forward - (a) have a rich pipeline of new product launches, driven by upcoming patent expirations in the Cardio Metabolic and allied segments (b) expanding coverage of cardiologists and consulting physicians by up to 50% in the next two years
⢠Number of MRs have come down to 2036 from 2345 due to closing of one of the divisions IVS
⢠Guidance - 15% growth in both topline and bottomline
⢠Per management, due to high usage of Steroids during the treatment of Covid, the onset age of diabetics (which is currently 42.5 yrs) can prepone as much as 5 yrs, so India as a country is on the verge of massive surge in diabetes cases, which would be beneficial for chronic players like Eris
⢠* April monthâs growth over march was extremely good*
⢠Not looking for any major capex for next 3-4 yrs
⢠ReNerve â the flagship band acquired among Stridesâ portfolio â has grown at a CAGR of 17% since acquisition and is close to Rs 135-140 cr per annum.
⢠The company has around Rs 400 cr cash â which they like to maintain for future inorganic opportunities
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