Eris Lifesciences Ltd delivered strong financial results for the quarter ended March 2025, reporting a consolidated net profit of ₹93.8 crore, marking a robust 31.1% increase compared to ₹71 crore in the same quarter last year. This impressive profit growth was supported by a significant 27.9% rise in revenue from operations, which reached ₹705 crore during Q4 FY25. The revenue boost stemmed from a combination of organic growth in its core business and contributions from recent acquisitions, notably including Biocon’s India formulations portfolio.

The company’s operational efficiency was reflected in its Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA), which soared 69.8% year-on-year to ₹252.2 crore. Importantly, the EBITDA margin expanded significantly to 36%, up from 27% in the previous year’s Q4. This margin improvement was primarily driven by a reduction in fixed expenses, which declined by 1,153 basis points as a percentage of revenue, showcasing effective cost management.

Eris Lifesciences maintained a strong cash flow, with the Q4 EBITDA-to-operating cash flow ratio at 111%, underlining the company’s healthy liquidity position. For the full fiscal year FY25, the company reported revenue of ₹2,894 crore, reflecting a 44% growth over FY24. EBITDA for the year also witnessed a notable rise of 51% to ₹1,017 crore.

One of the key performance indicators, the Return on Capital Employed (ROCE), improved to 15% for FY25 from 11% in the previous year. When excluding amortisation related to acquisitions, the adjusted ROCE rose to 20%, indicating better utilisation of capital and enhanced operational profitability.

The domestic branded formulations (DBF) segment, which forms the backbone of Eris Lifesciences’ business, recorded a revenue of ₹602 crore in Q4, reflecting a 25% year-on-year growth. Within this segment, organic growth contributed 10%, while the remaining growth was driven by acquisitions. Margins in the base business (excluding Biocon) witnessed a remarkable jump to 39.5% from 26.7% in the previous year, signalling improved operational leverage and efficiency.

Despite facing challenges such as supply disruptions in recombinant human insulin (RHI) products, the company’s insulin revenues still grew by 22%. These disruptions led to an estimated ₹50 crore loss in sales. To counter supply issues and bolster margins, Eris is ramping up insulin production at its Bhopal manufacturing facility, which started vial manufacturing in May 2025. Cartridge manufacturing is expected to begin by Q3 FY26, which is anticipated to further enhance profitability in upcoming quarters.

Looking ahead, Eris Lifesciences has provided optimistic guidance for FY26. It expects DBF revenue to reach ₹2,900–3,050 crore, implying a growth rate between 15% and 21%. Consolidated revenue is projected between ₹3,325 crore and ₹3,500 crore. The company also forecasts consolidated EBITDA in the range of ₹1,190–1,255 crore, maintaining healthy margins around 36%.

Eris continues to invest heavily in research and development (R&D) and capacity expansion. A notable capital expenditure is planned on a new injectable block at its Ahmedabad campus, with a capex estimated between ₹100 and ₹120 crore. The company is also targeting regulatory approvals and commercialisation of export products from its Swiss Parenterals unit starting Q4 FY26, aiming to strengthen its global footprint.

On the financial health front, Eris Lifesciences ended FY25 with net debt of ₹2,222 crore and has set a target to reduce this to ₹1,800 crore by FY26, aiming for a debt-to-EBITDA ratio of 1.5x, which signals prudent balance sheet management.

The company is confident about strong earnings per share (EPS) growth, projecting over 50% growth in FY26. This expected surge is supported by anticipated margin expansion, debt reduction, and successful execution of its product pipeline, particularly in the growing diabesity segment and with the launch of new GLP-1 therapies.

Despite the positive financial performance and outlook, Eris Lifesciences shares closed slightly lower at ₹1,434.90 on the BSE, down over 2%, possibly reflecting short-term market volatility.

In conclusion, Eris Lifesciences’ strong Q4 and FY25 results reflect solid business growth driven by strategic acquisitions, operational efficiencies, and robust demand in core segments. Its focus on expanding insulin production, sustained R&D investment, and debt reduction highlights a well-rounded growth strategy aimed at consolidating its position in the competitive pharmaceutical sector. With an encouraging outlook for FY26, the company is poised to deliver value to shareholders and maintain its growth momentum in the coming years.

The Upcoming IPOs in this week and coming weeks are Blue Water Logistics, Unified Data - Tech Solutions, Victory Electric Vehicles International, Borana Weaves, Dar Credit and Capital, Belrise Industries, Wagons Learning.

The Closed IPOs are Accretion Pharmaceuticals, Integrity Infrabuild Developers.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.