ERIS - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 2.8
| Stock Code | ERIS | Market Cap | 19,758 Cr. | Current Price | 1,427 ₹ | High / Low | 1,910 ₹ |
| Stock P/E | 70.1 | Book Value | 203 ₹ | Dividend Yield | 0.51 % | ROCE | 6.86 % |
| ROE | 3.02 % | Face Value | 1.00 ₹ | DMA 50 | 1,489 ₹ | DMA 200 | 1,536 ₹ |
| Chg in FII Hold | -0.36 % | Chg in DII Hold | 0.95 % | PAT Qtr | 150 Cr. | PAT Prev Qtr | 100.0 Cr. |
| RSI | 46.9 | MACD | -34.9 | Volume | 26,911 | Avg Vol 1Wk | 40,948 |
| Low price | 1,097 ₹ | High price | 1,910 ₹ | PEG Ratio | -1.62 | Debt to equity | 0.79 |
| 52w Index | 40.6 % | Qtr Profit Var | 432 % | EPS | 20.7 ₹ | Industry PE | 29.1 |
📊 Analysis: ERIS shows weak fundamentals for long-term investment despite recent profit growth. ROCE (6.86%) and ROE (3.02%) are very low, indicating poor capital efficiency. EPS of 20.7 ₹ is modest, and debt-to-equity at 0.79 reflects relatively high leverage compared to peers. The P/E ratio (70.1) is far above the industry average (29.1), suggesting overvaluation. Dividend yield of 0.51% is minimal. PEG ratio is negative (-1.62), highlighting valuation concerns relative to growth. Technically, the stock is trading below DMA 50 (1,489 ₹) and DMA 200 (1,536 ₹), with RSI at 46.9 and MACD negative, suggesting weak momentum.
💰 Ideal Entry Zone: 1,100 ₹ – 1,250 ₹ (closer to 52-week low, offering margin of safety and better valuation comfort).
📈 Exit / Holding Strategy: If already holding, consider exiting on rallies near 1,550–1,600 ₹ (close to DMA resistance). Long-term holding is not advisable unless ROE and ROCE improve significantly. Current metrics suggest weak growth potential, so capital may be better deployed in stronger pharma peers.
Positive
- Quarterly PAT growth (150 Cr. vs 100 Cr.), showing earnings momentum.
- DII holdings increased (+0.95%), reflecting domestic institutional support.
- EPS of 20.7 ₹ indicates profitability despite weak efficiency ratios.
Limitation
- Extremely high P/E ratio (70.1) compared to industry average (29.1).
- Low ROCE (6.86%) and ROE (3.02%), showing poor capital efficiency.
- Debt-to-equity ratio of 0.79, relatively high leverage.
- PEG ratio negative (-1.62), reflecting valuation concerns.
Company Negative News
- Decline in FII holdings (-0.36%), showing reduced foreign investor confidence.
- Technical weakness with MACD negative and price below DMA 50 & 200.
Company Positive News
- Quarterly profit variation +432%, showing strong earnings recovery.
- DII holdings increased, reflecting domestic institutional confidence.
Industry
- Industry PE at 29.1, far below company’s valuation, highlighting overvaluation.
- Pharma sector benefits from steady demand and product diversification, offering long-term growth visibility.
Conclusion
⚠️ ERIS is not a strong candidate for long-term investment due to poor ROE, ROCE, high debt, and unsustainable valuation. Entry only makes sense near deep value zones (1,100–1,250 ₹) for short-term recovery trades. Long-term investors should avoid or exit on rallies unless fundamentals improve.
Selva, would you like me to extend this into a peer benchmarking overlay with pharma sector peers (like Torrent Pharma, Alkem, Abbott India) so you can compare relative strength and margin-of-safety positioning for your basket rotation strategy?