Eris margin rebounds, but tax credit drives a 172.69% profit surge
Operating margin rose as costs declined faster than revenue, while international revenue missed management's target and supply disruptions affected overseas EBITDA.
Filed 20 May 2026, 14:44 IST · ERIS Lifesciences Ltd (ERIS)
Key takeaways
- Consolidated operating margin expanded 1.28 percentage points sequentially to 36.16% as expenses fell faster than revenue.
- Net profit rose 172.69% year-on-year, but the increase was largely tax-led as the tax rate moved to -75.08% from 20.58%.
- The stock gained 9.13% on results day, well above its 3.62% median absolute move after the past eight results.
Price around the results
Revenue softened sequentially, but cost control lifted margin
Consolidated revenue grew 7.27% year-on-year while expenses grew 6.64%, allowing operating profit to rise 8.39% and operating margin to widen by 0.38 percentage points. Sequentially, revenue declined 6.30%, but expenses fell 8.15%, so operating margin improved 1.28 percentage points to 36.16%. The sequential margin recovery came despite lower sales, rather than from revenue growth.
Profit growth was tax-led, not other-income-led
Profit before tax increased 23.70% year-on-year, helped by a 15.95% fall in interest and a 9.94% decline in depreciation. Net profit rose 172.69% because the tax rate shifted from 20.58% to -75.08%, indicating a tax credit rather than a normal tax charge. Other income contributed only 0.65% of pre-tax profit, so it was not a material driver of the reported profit increase.
Margin recovered from Q3 and remains above the healthcare peer median
Operating margin rose from 34.88% in Q3FY26 to 36.16% in Q4FY26, reversing the prior-quarter decline; it remains below the 36.37% recorded in Q2FY26. Across 48 healthcare companies that have reported the same quarter, Eris's margin was 12.78 percentage points above the sector median of 23.38%.
International business missed targets amid supply disruption
Management said international Q4 revenue was Rs 86 cr against a target of Rs 115 cr, while FY26 revenue was Rs 348 cr against a target of Rs 375 cr and grew 7% year-on-year. The company told analysts it had invested ahead of revenue to enter regulated markets through its CDMO business. Management also said it could not ship about Rs 30 cr of finished goods, and that supply-chain disruptions affected international FY26 EBITDA and compressed margins versus FY25.
Results-day reaction was unusually large for this stock
The stock gained 9.13% on results day, followed by a 3.72% rise on the next session and a 7.10% gain after 30 sessions. This was larger than the 3.62% median absolute move across the past eight results, when the stock rose three times and fell five times. A corporate action overlapped with the results-day move, which limits how much of the reaction can be attributed to the quarter alone.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹757 cr | ₹807 cr | -6.30% | +7.27% |
| Other income | ₹1 cr | ₹-17 cr | — | -87.14% |
| Expenses | ₹483 cr | ₹526 cr | -8.15% | +6.64% |
| Operating profit | ₹274 cr | ₹282 cr | -2.86% | +8.39% |
| Operating margin (%) | 36.16% | 34.88% | — | — |
| Interest | ₹46 cr | ₹49 cr | -6.55% | -15.95% |
| Depreciation | ₹70 cr | ₹70 cr | -1.09% | -9.94% |
| Profit before tax | ₹159 cr | ₹145 cr | +9.67% | +23.70% |
| Tax | ₹-120 cr | ₹37 cr | — | — |
| Net profit | ₹279 cr | ₹109 cr | +156.46% | +172.69% |
| EPS (₹) | ₹20.60 | ₹7.32 | +181.42% | +198.55% |
Operating margin of 36.16% compares with a Healthcare sector median of 23.38% across 48 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +9.13% | +8.96% |
| Next session | +3.72% | — |
| 5 sessions | +1.09% | -0.13% |
| 15 sessions | +2.20% | — |
| 30 sessions | +7.10% | — |
Volume on the results session was 12.98× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- International Q4 revenue was Rs. 86 crore versus a targeted Rs. 115 crore.
- International FY26 revenue was Rs. 348 crore versus a targeted Rs. 375 crore, with 7% year-on-year growth.
Expansion
- The company invested ahead of revenue in expanding into regulated markets through its CDMO business.
Problems & risks
- The company was unable to ship approximately Rs. 30 crore of finished goods.
- International FY26 EBITDA was affected by supply chain disruptions.
- International margins were compressed relative to FY25.
What to watch
- Whether operating margin holds above 36.16% after the Q4 recovery.
- Whether international revenue closes the gap between Rs 86 cr in Q4 and the Rs 115 cr target cited by management.
- Whether the tax rate moves back from -75.08% toward a normal positive charge.