Eris Lifesciences Limited — Q3 FY26 earnings call

Call held 13 Feb 2026

Management summary

Eris Lifesciences delivered a robust Q3 FY26, marked by strong growth in Domestic Branded Formulations and a significant surge in its international business, achieving key market share milestones in Insulin. Consolidated PAT saw substantial growth, bolstered by reduced finance costs and tax rates. The company is poised for the launch of Semaglutide following regulatory approval for its partner. However, it faces challenges with lower cash flow conversion and a lagging OAD portfolio, while strategically optimizing its product mix by discontinuing non-core brands.

Highlights

  • Domestic Branded Formulations (DBF) revenue grew 10% YoY for 9M FY26, with full FY26 expected at 12% growth and 37% operating margin.

  • DBF EBITDA for 9M FY26 grew 12% to INR 781 crore, with 9M YoY margin up 70 basis points.

  • Eris achieved 26% market share in RHI cartridges by January 2026, tripling its share in under two years and meeting its 25% target for Insulin.

  • International business recorded its highest-ever Q3 revenue of INR 111 crore (45% growth) and strong FY27 revenue visibility of INR 550-600 crore.

  • Consolidated PAT from continuing operations grew nearly 40% to INR 120 crore, driven by a 15% YoY reduction in interest cost and over 200 bps reduction in tax rate.

Concerns

  • Discontinuation of non-core tail-end brands will result in an approximate 2% impact on DBF revenue next year.

  • Operating Cash Flow (OCF) conversion was low at 50% in Q3, down from 120% in the same quarter last year.

  • The OAD (Oral Anti-Diabetic) portfolio growth is lagging the market and is expected to continue lagging for another 2-3 quarters due to FDC bans.

  • Initial gross margins for the newly launched Semaglutide product are expected to be lower, though management anticipates minimal overall impact on the DBF segment.

Key financials

2 periods

Q3

  • DBF Revenue
    ₹696 Cr
  • International Business Revenue
    ₹111 Cr
    YoY +45%
  • Consolidated Revenue
    ₹807 Cr
    YoY +11%
  • Consolidated PAT
    ₹120 Cr
    YoY +40%
  • Consolidated EPS
    ₹9

9M

  • DBF Revenue
    ₹2,106 Cr
    YoY +10%
  • DBF EBITDA
    ₹781 Cr
    YoY +12%
  • International Business Revenue
    ₹259 Cr
    YoY +11%
  • Consolidated Revenue
    ₹2,373 Cr
  • Consolidated EPS
    ₹28

What they filed

Q1 FY27: revenue down 23.3%, net profit down 52.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue437 400 405 579 650 +49%315 −21%277 −32%444 −23%
EBITDA143 100 121 216 297 +108%77 −23%22 −82%120 −44%
Net profit28 2 30 100 150 +436%3 +50%-9 −130%48 −52%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

₹1,000 Cr

as of 2025-12-31 quantified

Execution

Full commercialization of the INR 1,000 crore is more like a three-year job.

The EU CDMO segment's order book is consistently building up, reaching over INR 1,000 crores by the end of Q3.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹80 Cr this quarter · ₹200 Cr (9M FY26) planned
    • Insulin, GLP-1, and Injectable projects
    Q3 CapEx was close to INR 80 crore, again, largely towards the projects we have called out before. Nine-month CapEx, close to INR 200 crore. So, we'll be in that range of INR 200-250 crore per annum CapEx on the Insulin, GLP-1, and Injectable side.
  • Debt Net ₹2,270 Cr · 1.5× EBITDA
    Net debt at the end of the quarter stood at INR 2,270 crore, and our CapEx guidance for the next 3 years remains what it was. So, we expect to get to a net debt to EBITDA ratio of 1.5x by the end of this calendar year.
  • Liquidity Liquidity disclosed OCF came in at 50% this quarter versus 120% in the same quarter last year. Expect to reduce debtor days by 10-14 days in Q1 and Q2 next FY.
    OCF came in at 50% this quarter versus 120% in the same quarter last year. And Q3 EPS came in at INR 9, and nine-month EPS at INR 28 in tandem with the growth reported in profit after tax. ... we will be able to reduce our debtor days by at least 10-14 days going ahead, which will drive an improvement in OCF.

Guidance & targets

Revenue

  • DBF Revenue Growth Revenue · FY26 · High confidence 12%
    we're happy to share that we have strong visibility to deliver a revenue growth of 12% in Branded Formulations this year

    — Mr. V. Krishnakumar

  • International Business Revenue Revenue · FY26 · High confidence INR 370-375 crore
    Visibility for revenue for this year is in the zone of INR 370 crore to INR 375 crore

    — Mr. V. Krishnakumar

  • International Business Revenue Revenue · FY27 · High confidence INR 550-600 crores
    We have strong visibility of FY27 revenue of INR 550-600 crores

    — Mr. V. Krishnakumar

  • International Business Revenue Revenue · 2029-2030 · High confidence INR 1,000 crore
    we had articulated an aspiration that we would like our international business to achieve INR 1,000 crore in revenue by 2029-2030.

    — Mr. V. Krishnakumar

  • Consolidated Revenue (Excl. Trade Generics) Revenue · FY26 · High confidence INR 3,200 crore
    we are looking at INR 3,200 crore revenue, which will be 12% growth excluding Trade Generics.

    — Mr. V. Krishnakumar

  • CDMO Revenue Revenue · Next Year · High confidence INR 125-160 crore
    we've called out a definite amount of CDMO revenue, which is INR 125-160 crore that we expect to come in next year.

    — Mr. V. Krishnakumar

Margin

  • DBF Operating Margin Margin · FY26 · High confidence 37%
    with a 37% operating margin.

    — Mr. V. Krishnakumar

  • DBF EBITDA Margin (Excluding Non-Core) Margin · FY26 · High confidence 39% plus
    and we expect to close the year at 13-14% growth with an EBITDA margin of 39% plus.

    — Mr. V. Krishnakumar

  • Consolidated EBITDA Margin Margin · FY26 · High confidence 36%

    From 35% today

    and EBITDA margin moving up from 35% last year to 36% this year.

    — Mr. V. Krishnakumar

Market Share

  • RHI plus Glargine Market Share Market Share · Long-term · High confidence 25%
    we are on course to replicate this in the overall RHI plus Glargine market as well.

    — Mr. V. Krishnakumar

Profitability

  • International Business EBITDA Profitability · FY26 · High confidence INR 115 crore
    with an EBITDA of 115-odd crore.

    — Mr. V. Krishnakumar

  • International Business EBITDA Profitability · FY27 · High confidence INR 180-200 crores
    with an EBITDA of INR 180-200 crores.

    — Mr. V. Krishnakumar

  • Consolidated EBITDA (Excl. Trade Generics) Profitability · FY26 · High confidence INR 1,150 crore
    EBITDA of around INR 1,150 crore, which would be a 15% growth excluding Trade Generics.

    — Mr. V. Krishnakumar

  • EBITDA Drag from Manufacturing Initiatives Profitability · Annually · High confidence INR 60-90 crore
    At a yearly level, it would be around INR 60-90 crore.

    — Mr. Amit Bakshi

Debt

  • Net Debt to EBITDA Ratio Debt · End of Calendar Year 2026 · High confidence 1.5x
    So, we expect to get to a net debt to EBITDA ratio of 1.5x by the end of this calendar year.

    — Mr. V. Krishnakumar

Capex

  • Annual CapEx Capex · Per Annum · High confidence INR 200-250 crore
    So, we'll be in that range of INR 200-250 crore per annum CapEx on the Insulin, GLP-1, and Injectable side.

    — Mr. V. Krishnakumar

Working Capital

  • Debtor Days Reduction Working Capital · Q1 and Q2 next FY · Medium confidence 10-14 days
    we see that by the end of Q1 and Q2, we will be able to reduce our debtor days by at least 10-14 days going ahead

    — Mr. Amit Bakshi

What to watch in Q4 FY26

Debtor Days Reduction

Q1 and Q2 next FY
Current OCF 50% in Q3
Target Reduce debtor days by 10-14 days

Why it matters

Improvement in cash flow conversion is crucial for financial health and funding future growth initiatives.

we see that by the end of Q1 and Q2, we will be able to reduce our debtor days by at least 10-14 days going ahead, which will drive an improvement in OCF.

Risks & concerns

  • OAD Portfolio Lagging Market Growth

    medium

    OAD portfolio growth is still lagging market growth due to FDC bans and is expected to continue for 2-3 quarters.

    Management acknowledged

  • Lower Operating Cash Flow Conversion

    medium

    OCF conversion was 50% in Q3, down from 120% last year, attributed to product mix from recent acquisitions.

    Analyst acknowledged

  • Initial Margin Compression from Semaglutide Launch

    low

    Initial gross margins for Semaglutide will be lower, but the overall impact on the INR 3,000 crore DBF segment is not expected to be significant.

    Management acknowledged

  • Revenue Impact from Non-Core Brand Discontinuation

    low

    Discontinuation of non-core tail-end brands will result in an approx. 2% impact on DBF revenue next year, though it will improve operating profit.

    Management acknowledged

Q&A highlights

7 direct
Debt Repayment Schedule and Capex Front-loading Direct
This slide is pretty much consistent with what we showed you last quarter. So, there is no change. We had shared in the previous quarter that because of the attractiveness of certain strategic opportunities that have presented themselves on the Injectable Insulin and GLP side, we have decided to prepone or front-load the capital investment. The CapEx guidance for the 3-year period from '26 to '28 was outlined as around INR 750 crore. There is no change in the total number except that it is being front loaded. So that is what causes the delay in the debt repayment.

Clarified that debt repayment delay is due to strategic front-loading of CapEx for high-growth areas, not a change in overall CapEx plan.

Asked by Nitin Gosar

Esaxerenone Market Opportunity and Target Audience Direct
So, it reduces hypertension as good as other MRAs but has a very profound effect on kidney protection and can be used at a very low GFR also. So, I'm repeating this is a disease-modifying drug. We find a lot of hypertension patients moving on to this drug, especially patients who are on resistant hypertension, which needs three drugs to control hypertension, which is almost 30% of the universe. And then because it has an added advantage, a big advantage to reverse microalbuminuria, it will be used a lot in patients with diabetes who also have early CKD. So, this is a very well kind of known phenomenon. ... MRA plus non-steroidal MRA in India are close to INR 800 - 1,000 crore.

Provided detailed insight into the clinical benefits, target patient population, and estimated market size for the new hypertension drug Esaxerenone.

Asked by Nitin Gosar

Low Cash Flow Conversion (OCF) in Q3 Partial
We are looking at where we are today, we see that by the end of Q1 and Q2, we will be able to reduce our debtor days by at least 10-14 days going ahead, which will drive an improvement in OCF. And why has it changed from what it used to be, now we have a lot of Injectables, Insulins, Hospital supplies and all those things, because last couple of our acquisitions were on that side.

Addressed the significant drop in OCF, attributing it to product mix from recent acquisitions and outlining a plan for improvement in debtor days.

Asked by Pragati Lunawat

Semaglutide Initial Margins and NATCO Partnership Exclusivity Direct
Yeah, Gaurav, that will be a fair assumption. It is not because of because of the partnership, because there, you know, we have invested in equal quantity. It is all about the first couple of batches to get the approvals right. So, therefore, in my view, this will be a phenomenon across, but that is my view. But you are right, initial days, the gross margins would be lower. ... Yeah. These relationships are exclusive at some level.

Confirmed initial margin dilution for Semaglutide and clarified the exclusive nature of the partnership with NATCO.

Asked by Gaurav T

Discontinuation of Non-Core Brands Direct
So, look, Kunal, there have been two reasons. One is that we've been acquisitive and when we buy something, we also buy a team. But we are very easy to call this off because this is our simple business philosophy that we don't want to continue businesses which do not either have EBITDA today or is not on the line of getting a higher EBITDA, and it's not worth of kind of realigning our supply chain. ... Now put together, it is more like INR 60-70 crores, and I think that should be taken away.

Explained the strategic rationale behind discontinuing non-core brands, emphasizing profitability and strategic alignment, with a quantified revenue impact.

Asked by Kunal Dhamesha

EBITDA Drag from Manufacturing Initiatives Direct
At a yearly level, it would be around INR 60-90 crore. ... Look, as soon as Bhopal starts, Bhopal has started up with the Vials, which is a good move. So, this year, that number comes down. Then, you know, if, like, ETL starts doing something more than the India business, which we expect it to start doing, say, by April, May, June in that quarter. So, these are the two areas. If these two areas get up. Bhopal, we are very sure. We're just waiting, it's a matter of time. ETL, it's still work in progress.

Quantified the annual EBITDA drag from new manufacturing initiatives and provided timelines for when these initiatives (Bhopal, ETL) are expected to contribute and reduce the drag.

Asked by Kunal Dhamesha

Insulin Market Share and Pricing Strategy Direct
So overall, 25% in Glargine and RHI over the next 3 years. We have now got to 25-26% market share in RHI carts. ... Insulin market degrowing because our price is 40% less than the lead brand. That is why our volume share would be much higher than the value share. And then because we are so low priced, and this has been historically done, we see that there is a good price increment also almost every year for the next 4-5 years.

Detailed the company's aggressive pricing strategy in the insulin market (40% less than innovator) to gain volume share, and its expectation of continued market share growth and future price increments.

Asked by Rahul Agarwal

EU CDMO Order Book Execution Timeline Direct
Regarding commercialization, very straightforward because these are products you develop, take stability, file a dossier, and then there is the timeline for EU approval. So, we've called out a definite amount of CDMO revenue, which is INR 125-160 crore that we expect to come in next year. And the full commercialization of the INR 1,000 crore is more like a three-year job.

Clarified the phased revenue realization from the INR 1,000 crore CDMO order book, with a portion expected next year and full commercialization over three years.

Asked by Sudarshan Agarwal

4 min read 8 chapters

Detailed narrative

Q3 & 9M FY26 Performance Overview

Eris Lifesciences reported a strong Q3 FY26, with Domestic Branded Formulations (DBF) revenue reaching INR 696 crores for the quarter and INR 2,106 crores for the nine-month period, representing a 10% YoY growth. DBF EBITDA for 9M grew 12% to INR 781 crore, with the 9M margin expanding by 70 basis points YoY. On a consolidated basis, Q3 revenue hit an all-time high of INR 807 crore, an 11% increase YoY, and 13% YoY excluding trade generics. Consolidated PAT from continuing operations surged nearly 40% to INR 120 crore, primarily due to a 15% YoY reduction in interest costs and over 200 bps reduction in tax rate.

Insulin Manufacturing & Market Share Achievements

The company has successfully tripled its market share in the Insulin segment to 26% by January 2026, up from 8% at the time of the Biocon acquisition less than two years ago. This achievement fulfills its objective of securing 25% market share in RHI cartridges, and Eris is on track to replicate this in the broader RHI plus Glargine market. Manufacturing at the Bhopal facility is progressing, with over 5 million RHI vials produced since August 2025, Glargine vials commercial manufacturing starting this month, and RHI and Glargine cartridges expected to commence commercial production from Q2 next financial year.

International Business & CDMO Growth Trajectory

Eris's international business recorded its highest-ever quarterly revenue in Q3, reaching INR 111 crore, a 45% growth YoY, with EBITDA growing 46%. The company projects FY27 as a breakout year for this segment, with revenue expected to be INR 550-600 crores and EBITDA of INR 180-200 crores. A significant driver is the EU CDMO segment, which boasts an order book exceeding INR 1,000 crores at the end of Q3. Eris anticipates INR 125-160 crore in CDMO revenue next year, with the full commercialization of the INR 1,000 crore order book expected over a three-year period.

Strategic Product Launches: Semaglutide & Esaxerenone

Eris is preparing for the launch of Generic Semaglutide, following CDSCO approval for its partner Natco. The company has made significant progress in internalizing Semaglutide manufacturing at its Ahmedabad site, ensuring adequate capacity. Additionally, Eris is launching Esaxerenone, a novel nonsteroidal MRA developed in-house, for hypertension and proteinuria. This drug is considered a game-changer in hypertension management, offering benefits beyond blood pressure reduction, and Eris was the first company to develop and gain approval for it in India.

Capital Allocation and Debt Management

Net debt at the end of Q3 stood at INR 2,270 crore, with a clear target to achieve a net debt to EBITDA ratio of 1.5x by the end of calendar year 2026. Capital expenditure for Q3 was approximately INR 80 crore, contributing to a nine-month CapEx of INR 200 crore, primarily allocated to strategic projects in Insulin, GLP-1, and Injectables. The company's 3-year CapEx guidance (FY26-28) remains around INR 750 crore, with investments strategically front-loaded to capitalize on attractive opportunities.

Portfolio Optimization and Margin Outlook

Eris has decided to discontinue certain non-core tail-end brands, which are expected to result in an approximate 2% impact on DBF revenue next year but will improve overall operating profit and margin. Excluding these non-core brands, the company expects to close FY26 with a 13-14% DBF growth and an EBITDA margin of 39% plus. While initial gross margins for Semaglutide are anticipated to be lower, management believes the overall impact on the INR 3,000 crore DBF segment will not be significant, and consolidated margins are expected to remain stable next year.

Cash Flow and Debtor Days Management

Operating Cash Flow (OCF) conversion for Q3 was 50%, a notable decrease from 120% in the same quarter last year. This shift is attributed to changes in the product mix following recent acquisitions in Injectables, Insulins, and Hospital supplies. Management is actively working to improve cash flow conversion and expects to reduce debtor days by 10-14 days in Q1 and Q2 of the next financial year, aiming to enhance overall liquidity.

Therapy Area Performance and R&D Outlook

In terms of therapy area performance, Eris continues to lead in Insulins and Dermatology. However, the OAD portfolio is currently lagging market growth due to FDC bans and is expected to continue doing so for the next 2-3 quarters before stabilizing. The company has made significant R&D investments in new technologies and products, which have not yet yielded returns but are expected to contribute in the coming year. Eris plans to disclose R&D expenses separately starting from the next financial year for greater transparency.

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