🧭 1. At a Glance
Entero Healthcare Solutions Ltd (NSE: ENTERO) is one of India’s top 3 healthcare product distributors by revenue, specializing in B2B pharma and surgical supply chain logistics. With ₹5,096 Cr in FY25 revenue and an IPO in Feb 2024, it’s chasing an ambitious dream: unify India’s chaotic pharma distribution ecosystem. But low margins (4%), heavy acquisitions, and average returns (ROE 5.6%) make it more of a “wait-and-heal” than “scalpel-sharp” story.
🎬 2. Introduction – Disrupting Distributors, One Chemist at a Time
You know CRED? Dreamed of uniting India’s elite credit card users under one roof?
Entero is doing that for… medical wholesalers. Yup.
India has 65,000+ pharma distributors, most unorganized, family-run. Entero wants to consolidate them via acquisitions, tech, and supply-chain optimization.
🛒 35+ distributor acquisitions
🩺 1,800+ pharma manufacturers served
🏪 80,000+ retailers supplied
🚑 Logistics, warehousing, digital ordering, even HealthEdge loyalty programs
Sounds cool. But is this startup-y unicorn dream working on the ground?
⚙️ 3. WTF Do They Even Do?
Core Business:
- Distribution of pharma + surgical products to hospitals, pharmacies, nursing homes, and stockists.
- Covers both demand generation (branding) and demand fulfilment (logistics).
- Offers tech platforms to both manufacturers (inventory, compliance) and retailers (e-ordering, loyalty).
Revenue Model:
- Margin between buying (from pharma companies) and selling (to chemists/hospitals)
- Logistics charges + tech SaaS revenue (very small part so far)
📌 It’s basically Amazon for medicines… but still building the warehouse.
📊 4. Financials – Scale’s Up, But So Is Skepticism
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| 🔼 Revenue (₹ Cr) | 3,300 | 3,922 | 5,096 |
| 💸 EBITDA (₹ Cr) | 64 | 112 | 172 |
| 📈 EBITDA Margin | 2% | 3% | 3% |
| 🧾 Net Profit (₹ Cr) | -11 | 40 | 107 |
| 💹 EPS (₹) | -28.1 | 8.99 | 21.80 |
✅ PAT has improved dramatically in FY25
⚠️ But margins still razor thin, and profitability dependent on scale economies
💸 5. Valuation – Is It Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| P/E (TTM) | 57x |
| P/B | 3.13x |
| ROE (TTM) | 5.64% |
| Market Cap | ₹5,402 Cr |
🤕 Not cheap for a logistics-margin business
😬 IPO came at ₹1,200, current CMP ₹1,242 = flat returns in 5 months
🧮 FV Calculation Range (FY26E):
- PAT estimate FY26: ₹140–150 Cr (30–40% growth)
- Fair P/E: 30–35x
- FV Market Cap: ₹4,200–₹5,250 Cr
- FV/share: ₹950–₹1,190
🧠 CMP ₹1,242 = already ahead of fair value based on FY26 earnings
🍿 6. What’s Cooking – News, Triggers, Drama
- 🛒 Acquired 5 more pharma distributors in May 2025
- 🧪 Increased stake in Peerless Biotech to 76%
- 📈 IPO raised ₹1,600 Cr for expansion + debt reduction
- 🧠 HealthEdge loyalty platform launched for retail pharmacies
- ⚠️ GST demand of ₹1.73 Cr in Feb 2025 (not significant)
Entero is going “aggressive aggregator” mode → but risks: integration pain, thin margins, working capital drag.
🏦 7. Balance Sheet – How Much Debt, How Many Dreams?
| Item | FY25 |
|---|---|
| Equity Capital | ₹44 Cr |
| Reserves | ₹1,681 Cr |
| Borrowings | ₹385 Cr |
| Net Worth | ₹1,725 Cr |
| Total Liabilities | ₹2,703 Cr |
| Fixed Assets | ₹560 Cr |
| Cash & Inv. Assets | ~₹500 Cr |
✅ Net debt manageable post IPO
⚠️ Rapid growth from acquisitions → pressure on cash flow + execution
💵 8. Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) | Capex/Investing | FCF Est |
|---|---|---|---|
| FY23 | -₹45 Cr | -₹49 Cr | Negative |
| FY24 | -₹37 Cr | -₹704 Cr 😬 | Deep red |
| FY25 | -₹77 Cr | +₹220 Cr (sale) | Still negative |
💀 Operating cash flow negative in all years
💣 Needs working capital for inventory & receivables
📉 True FCF is still heavily negative despite PAT turning positive
📐 9. Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROE (%) | 5.6% |
| ROCE (%) | 8.7% |
| OPM (%) | 3.4% |
| Inventory Days | 52 |
| Debtor Days | 59 |
| Payables Days | 31 |
| CCC (Cash Cycle) | 80 Days |
📦 Working capital intensive
📉 Sub-par return ratios
✅ Margins improved from 1–2% to 3.4%, but still low for valuation
📊 10. P&L Breakdown – Show Me the Money
| Quarter | Revenue (₹ Cr) | PAT (₹ Cr) | OPM (%) |
|---|---|---|---|
| Q1FY25 | 1,097 | 21 | 3% |
| Q2FY25 | 1,301 | 26 | 3% |
| Q3FY25 | 1,359 | 29 | 4% |
| Q4FY25 | 1,339 | 31 | 4% |
✅ Strong quarterly momentum
📈 Profit scaling with sales
⚠️ OPM still low – any inflation or regulatory hit could wipe out profits
🧾 11. Peer Comparison – Who Else in the Game?
| Company | P/E | ROCE (%) | OPM (%) | Sales (₹ Cr) | PAT (₹ Cr) |
|---|---|---|---|---|---|
| Entero | 57 | 8.7 | 3.4 | 5,096 | 107 |
| MedPlus Health | 68.5 | 10.5 | 7.9 | 6,136 | 150 |
| Apollo Pharmacy | N/A | ~15% est. | ~8% est. | ₹~10K Cr+ | ~₹500 Cr est |
Entero is the smallest and least profitable, but growing fastest.
MedPlus is more retail, Entero is B2B bulk-focused
📋 12. Miscellaneous – Shareholding, Promoters, KMP
| Shareholder Category | Mar 2025 |
|---|---|
| Promoters | 52.42% |
| FIIs | 19.92% |
| DIIs | 9.63% |
| Public | 18.03% |
👨💼 Key Management:
- CEO: Vishal Jain (ex-CEO of India Healthcare Solutions)
- Backed by OrbiMed, PremjiInvest, and CDC UK
💡 FIIs trimmed stake from 23% → 19% post-IPO
🧑⚖️ 13. EduInvesting Verdict™
Entero is a rare attempt at organizing India’s fragmented pharma distribution network. It’s growing at startup speeds—but profitability is still a toddler.
Pros:
- 🚚 Strong revenue momentum
- 🧪 Pharma logistics market = ₹4 lakh Cr, largely unorganized
- 🧠 Tech integration + acquisitions = value unlock if executed well
Cons:
- ⚠️ Expensive valuation for razor-thin margins
- 💸 Negative cash flow, heavy working capital
- 😬 Low ROE + ROCE = not capital-efficient… yet
🚑 Verdict: Needs more oxygen (execution + margin expansion) before it’s ready for a long-term portfolio ICU bed.
✍️ Written by Prashant | 📅 July 11, 2025
Tags: Entero Healthcare, IPO 2024, Pharma Distribution, Healthcare Logistics, Supply Chain, PE-Backed Healthcare, MedPlus Peer, B2B Healthcare, EduInvesting
