ERIS - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 2.8
| Stock Code | ERIS | Market Cap | 17,850 Cr. | Current Price | 1,285 ₹ | High / Low | 1,910 ₹ |
| Stock P/E | 60.1 | Book Value | 203 ₹ | Dividend Yield | 0.57 % | ROCE | 6.86 % |
| ROE | 3.02 % | Face Value | 1.00 ₹ | DMA 50 | 1,391 ₹ | DMA 200 | 1,490 ₹ |
| Chg in FII Hold | -0.36 % | Chg in DII Hold | 0.95 % | PAT Qtr | 17.0 Cr. | PAT Prev Qtr | 150 Cr. |
| RSI | 36.0 | MACD | -29.5 | Volume | 86,156 | Avg Vol 1Wk | 75,016 |
| Low price | 1,097 ₹ | High price | 1,910 ₹ | PEG Ratio | -1.39 | Debt to equity | 0.79 |
| 52w Index | 23.1 % | Qtr Profit Var | 853 % | EPS | 20.8 ₹ | Industry PE | 27.2 |
💰 Revenue & Profitability: Quarterly PAT of 17 Cr compared to 150 Cr in the previous quarter shows a sharp decline, raising concerns about earnings stability. EPS at 20.8 ₹ reflects weak profitability relative to valuation.
📉 Return Metrics: ROCE at 6.86% and ROE at 3.02% indicate poor capital efficiency and weak shareholder returns, far below industry standards.
📊 Valuation Indicators: Stock P/E of 60.1 is significantly higher than the industry average of 27.2, suggesting severe overvaluation. Book Value of 203 ₹ compared to current price of 1,285 ₹ shows a steep premium. PEG ratio of -1.39 highlights distorted valuation relative to growth.
🏦 Debt & Cash Flow: Debt-to-equity ratio of 0.79 indicates relatively high leverage, which adds financial risk given weak profitability.
⚙️ Business Model & Competitive Advantage: ERIS operates in pharmaceuticals with a focus on branded formulations. While brand presence is strong, competitive advantage is limited by weak profitability and high debt burden.
📈 Technical Zone: Current price (1,285 ₹) is below DMA 50 (1,391 ₹) and DMA 200 (1,490 ₹), reflecting bearish momentum. RSI at 36.0 suggests nearing oversold territory, while MACD (-29.5) confirms negative sentiment.
🎯 Entry Zone Recommendation: Entry should only be considered near strong support levels around 1,100–1,200 ₹ with strict risk management. Long-term holding is not advisable unless profitability stabilizes and debt reduces.
Positive
- Strong brand presence in pharmaceuticals.
- Dividend yield of 0.57% provides some income support.
- DIIs increased holdings (+0.95%), reflecting domestic institutional confidence.
Limitation
- Weak ROCE (6.86%) and ROE (3.02%) indicate poor efficiency.
- High debt-to-equity ratio (0.79) adds financial risk.
- Severely overvalued with P/E of 60.1 vs industry 27.2.
Company Negative News
- Sharp decline in quarterly PAT (17 Cr vs 150 Cr).
- Decline in FII holdings (-0.36%) signals reduced foreign investor confidence.
Company Positive News
- DIIs increased stake (+0.95%).
- Strong brand recognition in pharma formulations.
Industry
- Pharmaceutical sector benefits from steady demand and R&D-driven growth.
- Industry average P/E (27.2) is much lower than ERIS’s, highlighting overvaluation.
- Competition remains intense, requiring margin protection and innovation.
Conclusion
⚠️ ERIS shows weak fundamentals with poor return ratios, high debt, and severe overvaluation. Despite brand presence and some institutional confidence, the sharp decline in profitability raises concerns. Entry should only be considered near 1,100–1,200 ₹ with strict stop-loss discipline. Long-term holding is not recommended unless earnings stabilize and leverage reduces.
Would you like me to prepare a peer benchmarking overlay with other pharma mid-cap players (like Alkem, Torrent Pharma, Glenmark, Ajanta Pharma) so you can compare ERIS’s valuation, ROE/ROCE, and entry zones against competitors for sector rotation clarity?