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Eris Life sciences: IPO

Eris Life sciences: IPO

Eris Lifesciences is entering the primary market on Friday 16 June 2017, with an offer for sale (OFS) of up to 2.89 crore equity shares of Re. 1 each by PE firm ChrysCapital (77% of OFS), promoters and other shareholders in the price band of Rs. 600 to Rs. 603 per share. Representing 21% of the post issue paid-up share capital, issue will raise Rs. 1,741 crore at the upper end and close on Tuesday, 20 June. Listing is expected on 29 June.
The Ahmedabad-based pharma firm has been manufacturing and selling branded pharmaceutical products in cardiovascular (chronic) and anti-diabetic (acute) categories for a decade.
The company has a formulation facility in Guwahati, Assam, which contributes 60 percent of revenues, while its manufacturing partner Sozin Flora Pharma contributed 28 percent. The rest came from third-party manufacturing.
While the company’s growth since its inception 10 years ago is marvelous, what is commendable is that it did not require any external funding to fuel the same.
As 31-3-17, on net worth of Rs. 540 crore, company has a debt free balance sheet. Surplus cash and equivalents are Rs. 261 crore, translating into cash per share of Rs. 19. Currently, company has only 9 shareholders – 5 promoters with combined holding of 59.18%, whose stake, post IPO will shrink to 55.93%. Besides ChrysCapital’s 16.25%, 3 individuals own 24.57%, who will own 23.07% post IPO.
Very strong fundamentals, expected healthy growth, cash rich status, no US FDA overhangs make this issue an ‘apply’, despite uneconomical pricing.

Source: Bloomberg, SP Tulsian

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