ERIS Q4 FY26 Results Analysis: PAT Surges 172%, Margin Expansion 64 bps

ERIS's Q4 FY26 numbers came in mixed, with revenue of Rs. 756.56 Cr (+7.27% YoY) and PAT growth of +172.68% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quarter Snapshot

ERIS delivered solid 7.27% revenue growth and 64bps margin expansion in FY26, with EBITDA margin of 35.79% nearly meeting the 36% target. However, both revenue and EBITDA missed management's guidance ranges by 6-11%. The PAT surge of 172% YoY was largely driven by a one-time Rs.132 Cr deferred tax credit. Working capital deteriorated significantly with OCF/EBITDA at 48%. Key positives include insulin market share tripling to 26% and progressing deleveraging (Net Debt/EBITDA at 2.05x). Near-term catalysts include GLP-1 ramp-up and EU-CDMO order book growth, though the latter faces regulatory delays.

Key Investment Insights

Key Positives

• Revenue grew 7.27% YoY to Rs.756.56 Cr in Q4 and 8.14% for full year FY26
• EBITDA margin expanded 64 bps YoY to 35.79% in FY26, near 36% guidance target
• PAT grew 172.68% YoY to Rs.279 Cr in Q4 (normalized PAT grew 43.54% YoY excluding DTC)
• Operating leverage visible - expenses grew 2.36% while revenue grew 7.27%
• Net Debt/EBITDA improved from 2.2x to 2.05x, progressing toward 1.5x target
• Insulin market share tripled from 8% to ~26% in less than 2 years
• Finance costs declined 15.95% YoY to Rs.45.62 Cr in Q4

Risk Factors

• FY26 revenue of Rs.3,129 Cr missed guidance of Rs.3,325-3,500 Cr by 6-11%
• FY26 EBITDA of Rs.1,120 Cr missed guidance of Rs.1,190-1,255 Cr by 6-11%
• Working capital deteriorated significantly - trade receivables up Rs.210 Cr, OCF/EBITDA at 48%
• Swiss Parenterals received HALMED non-compliance observations, EU-CDMO commercialization delayed
• Current ratio deteriorated from 0.89x to 0.74x YoY, indicating working capital stress
• Trade Generics segment being wound down represented ~12% of revenue but diluting margins