Eris LifeSciences has informed the stock exchanges that the meeting of the Board of Directors of the Company is scheduled on 03/07/2019 to consider Buy-back of fully paid-up equity shares of the Company. Eris LifeSciences Buyback as approved by the board entails Buy-Back of up to 17,39,130 Equity Shares at a price of Rs. 575/- (Rupees Five hundred seventy five only) per Equity Share, for a maximum aggregate consideration not exceeding Rs. 100 crore. Eris LifeSciences Buyback represents approximately 1.26% of the total paid-up Equity Share Capital of the Company and is on a proportionate basis under “Tender Offer” route. Record date for Eris LifeSciences Buyback has been fixed as 15th July, 2019.
See List of all Forthcoming and Recent Buybacks
Eris LifeSciences Buyback : Key Info
Type | Tender |
|---|---|
| MP initially | 503 |
| Announcement | 24-06-19 |
| MP after this | 512 |
| MP befo BM | 505 |
| Board meet | 03-07-19 |
| Buy Back Price | 575 |
| % Premium on MP | 14.31% |
| MP after BM | 499 |
| BuyBack Size Rs. Cr | 100 |
| BuyBack Size- Shrs | 1739130 |
| Tot No.of shares | 137,519,783 |
| % Buyback | 1.26% |
| Equity Capital- cr | 13.75 |
| FV of Share in Rs. | 1 |
| Shares - Retail | 260,870 |
| Record Date | 15-07-19 |
| MP on RD | |
| Buy Back Issue date | 01-01:14-01-20 |
| Shares on RD | 1,205,234 |
| Buyback Entitlement | 21.64% |
| Valid Bids | |
| Shares Tendered | |
| Tendering ratio | |
| Retail response | |
| Aceeptance % | 61.90% |
Eris LifeSciences Buyback: Acceptance Ratio Possibilities
This framework is based on estimation of shareholding of Eris Life Sciences shareholders who hold around 400 number of shares. To this we have added estimates/approximations for
1) Few additional purchase of Shares by existing shareholders with eye on earning additional returns through buyback. This is expected to be low.
2) Purchase of Shares by Arbitrage investors.
Eris LifeSciences Buyback could result in 10-20% acceptance ratio.
Return Scenarios: Eris LifeSciences Buyback
The absolute returns (Profit/Loss) that may accrue to an Investors/Arbitrage trader are a function of Percentage Acceptance Ratio and Price Post Buyback. Investors may kept in mind that stock markets are quite volatile at this juncture and there are many political and other uncertainties due to elections. We have depicted some scenarios for Absolute Returns in a table form as a function of various possible combinations of Acceptance Ratios and Price Post Buyback.
Shares Bought | 350 | Nos. | |
|---|---|---|---|
| Buyback Price | 575 | ||
| Absolute Returns | |||
| Price when posted | 500.00 | ||
| Investment (Rs.) | 175000 | ||
| MP Aft Buybk | |||
| Acceptance % | 470 | 480 | 490 |
| 10% | -3.90% | -2.10% | -0.30% |
| 20% | -1.80% | -0.20% | 1.40% |
| 30% | 0.30% | 1.70% | 3.10% |
About Eris Lifesciences
- Eris Lifesciences Limited was incorporated on January 25, 2007.
- Eris is developing, manufacturing and commercializing branded pharmaceutical products in select Therapeutic areas within the Chronic and Acute Categories of the Indian Pharmaceutical Market (“IPM”), such as: Cardiovascular; Anti-Diabetics; Vitamins; Gastroenterology; and Anti-Infectives.
- The Company was started by Shri Indubhushan Bakshi who has a very humble background. He is currently the Chairman and Managing Director of the company and recognized as an ‘Entrepreneur of the Year, 2013’ by Ernst & Young.
- Company’s focus has been on developing, manufacturing and marketing products, which are linked to lifestyle related disorders, that are chronic in nature, and to a target population which primarily consults specialists and superspecialists.
- Eris is one of the fastest growing company, in the Chronic category, among the top 25 companies in Indian Pharmaceutical Market.
- In 2017, Eris brought Strides’ India branded generics business for a consideration of Rs. 500 crore.
Eris LifeSciences: Price Trend, Summary of Financials
Financial Overview
| Market Cap- Rs. Cr | 6,854 |
| CMP in Rs. | 498.5 |
| Revenue 12 m ttm | 897 |
| Net profit-cr ttm | 285 |
| Equity Share Capital | 13.75 |
| Face Value | 1 |
| EPS TTM | 20.73 |
| Price / Earning (PE) | 24.05 |
| Book Value | 84.06 |
| Price / BV | 5.93 |
| ROCE % | 35.04% |
| ROE % | 40.31% |
| Sales 3 yr CAGR | 11.55 % |
| Debt / Equity Ratio | 0.00% |
| 52 week High/Low | 798.80 / 473.50 |
Assessment: Eris LifeSciences Buyback
- Eris LifeSciences Limited is 100% focused on Indian Market which insulates it from FDA woes.
- Eris Life Sciences is virtually debt free.
- Recorded profit growth of 34.50% over 5 years.
- Company’s 3 Years ROE is 46.42%.
- Eris Lifesciences reported poor numbers for Q4FY19 with weak sales (1% YoY) and miss on EBITDA. Company attributed the same to significant inventory correction and discontinuation of a key brand
- Management expects FY20 sales to be 30-50% higher than market growth.
- Eris LifeSciences Guwahati unit enjoys significant tax advantages.
- Eris had in 2017 bought Strides’ India branded generics business.
- Eris has a high focus on growth in chronic/ sub-chronic segment which now constitutes 85% of sales.
- Post buyback most scrips have shown a highly -ve price movement. Depending on the price movement. Return in Eris LifeSciences Buyback will be determined more by the quarterly results of the company as issue size is small and hence acceptance ratios are expected to be low.
- I may consider to participate in Eris LifeSciences buyback in very small quantity at present prices or slightly lower prices
- Eris LifeSciences prices are highly susceptible to Q1FY20 results as its Q4Fy19 was not up to the mark & as scrip is not in F&O, prices post buyback can be volatile.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering and Management . Iam also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2). This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/ Buy Back/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.