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Eris Lifesciences Q3 profit dips 19% on labour code impact

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Eris Lifesciences Q3 FY26 profit falls 19% after Rs 17 crore labour code hit

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SEO Description

Eris Lifesciences reports 19% drop in Q3 FY26 consolidated profit to Rs 108.83 crore after exceptional hit from new labour codes; revenue rises 11% YoY.

What is covered under the Article

• Eris Lifesciences posts 11% rise in Q3 revenue but profit falls 19% due to Rs 17.24 crore exceptional charge from new labour codes.

• Consolidated nine-month profit jumps 35% YoY; operating margins remain strong despite higher employee and compliance costs.

• Swiss Parenterals becomes wholly owned subsidiary post preferential allotment; board approves results with unmodified audit review.

Long-form Article

Eris Lifesciences Limited reported a mixed performance for the quarter ended December 31, 2025, with healthy revenue growth but a decline in net profit due to an exceptional impact arising from implementation of the new labour codes. The Board approved the unaudited standalone and consolidated financial results at its meeting held on February 13, 2026.

The company, which operates primarily in the pharmaceuticals segment, continues to maintain strong operating metrics, even as regulatory and compliance changes affected short-term profitability.

Q3 FY26 Consolidated Performance

For the quarter ended December 31, 2025, consolidated revenue from operations stood at Rs 807.45 crore, compared with Rs 727.45 crore in the corresponding quarter of the previous year. This reflects an approximate 11 percent year-on-year growth, driven by steady performance across product portfolios and subsidiary operations.

However, consolidated net profit for the quarter declined to Rs 108.83 crore, compared with Rs 134.47 crore in the September quarter and Rs 87.06 crore in the December 2024 quarter. On a year-on-year basis, profit rose versus last year’s Q3, but sequentially it declined due to exceptional adjustments.

Profit attributable to owners of the company stood at Rs 99.72 crore, while non-controlling interest accounted for Rs 9.11 crore.

Earnings per share for the quarter came in at Rs 7.32 basic and Rs 7.31 diluted, not annualised.

Exceptional Impact of New Labour Codes

One of the key reasons for pressure on quarterly profitability was the financial impact of the New Labour Codes introduced by the Government of India. Effective November 21, 2025, multiple labour legislations were consolidated into four unified labour codes.

As a result of changes in the definition of wages for employees and contract labour, the company reassessed its gratuity and leave liabilities. This led to an incremental past service cost of Rs 17.24 crore, which was disclosed as an exceptional item in the consolidated financial results.

After accounting for this exceptional expense, profit before tax for the quarter stood at Rs 145.35 crore, compared with Rs 172.67 crore in the previous quarter.

Management clarified that this is largely a one-time adjustment, and the long-term business fundamentals remain intact.

Nine-Month Performance

For the nine months ended December 31, 2025, consolidated revenue stood at Rs 2,372.86 crore, up from Rs 2,188.34 crore in the same period last year.

Net profit for the nine-month period rose to Rs 368.40 crore, compared with Rs 273.02 crore in the previous year, reflecting strong overall operational performance despite the exceptional charge.

Operating margin for the nine months improved to 27.06 percent, compared with 24.59 percent last year, highlighting improved efficiency and cost management.

Net profit margin stood at 15.53 percent, compared with 12.48 percent in the year-ago period.

Strong Financial Position

Eris Lifesciences continues to maintain a stable balance sheet:

• Debt to equity ratio stood at 0.67 times.

• Interest coverage ratio improved to 4.33 times for the quarter.

• Net worth rose to Rs 3,610.87 crore.

The company reported no outstanding redeemable preference shares and maintained comfortable liquidity metrics.

Swiss Parenterals Becomes Wholly Owned Subsidiary

In a significant corporate development, the company completed the allotment of 23,06,372 equity shares on January 16, 2026, through preferential allotment to the non-controlling interest holder of Swiss Parenterals Limited.

This transaction enabled Eris to acquire the remaining 30 percent stake in Swiss Parenterals. As a result, Swiss Parenterals has become a wholly owned subsidiary of the company with effect from January 16, 2026.

This move is expected to strengthen integration benefits, improve operational synergies, and enhance control over manufacturing capabilities.

Subsidiaries and Group Structure

The consolidated financial results include performance of subsidiaries such as:

• Eris Therapeutics Limited

• Eris Healthcare Private Limited

• Eris Pharmaceuticals Limited

• Swiss Parenterals Limited

• Eris Bionxt Private Limited

The group also has a joint venture, Levim Lifetech Private Limited.

The independent auditors, Walker Chandiok & Co LLP, issued an unmodified limited review report on the consolidated results, stating that nothing had come to their attention suggesting any material misstatement.

Standalone Performance

On a standalone basis, revenue from operations for Q3 FY26 stood at Rs 315.29 crore, while net profit after tax came in at Rs 3.09 crore.

Standalone profit was impacted more sharply due to exceptional items and internal restructuring adjustments.

For the nine-month period, standalone net profit stood at Rs 252.65 crore, compared with Rs 46.92 crore in the previous year, indicating strong cumulative growth.

Capital and ESOP Allotment

During the nine months ended December 31, 2025, the company issued and allotted 54,322 equity shares under its Employee Stock Option Scheme 2021.

As a result, the issued and paid-up equity share capital increased to Rs 13.62 crore.

Segment Information

The company continues to operate in a single reportable segment, namely Pharmaceuticals, as determined under Ind AS 108.

Its portfolio spans chronic therapies, branded generics, and hospital-focused products, supported by manufacturing and marketing infrastructure.

Industry Outlook

The Indian pharmaceutical sector continues to benefit from:

• Growing domestic demand for chronic therapies

• Increasing healthcare awareness

• Structural healthcare reforms

• Expansion in hospital and specialty segments

While regulatory changes such as labour code reforms have short-term accounting implications, companies with strong balance sheets and diversified portfolios remain well positioned for sustained growth.

Eris Lifesciences’ consistent revenue expansion, improved operating margins, and strategic consolidation of subsidiaries indicate that the company is focusing on long-term value creation.

Conclusion

Eris Lifesciences delivered solid revenue growth in Q3 FY26, but net profit declined due to a one-time exceptional impact from the new labour codes. Operational performance remains strong, margins are healthy, and debt levels are comfortable.

With Swiss Parenterals now a wholly owned subsidiary and continued focus on core pharmaceutical operations, the company appears positioned for steady growth in the coming quarters.

Investors will closely watch margin stability and integration benefits in upcoming quarters as the company navigates regulatory adjustments while maintaining growth momentum.

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