IPO listed on 16 Feb'24
Entero Healthcare Solutions Ltd
Minimum Investment
₹ 13,838 / 11 shares
Grey market premium
₹ 118 (9% premium)
Issue price
₹ 1258
Listing price
₹ 1,229
Listing day %
-9%
Listing on
Feb 16, 2024
Our Verdict:
Avoid
- Entero Healthcare Solutions (Entero) has embarked on an aggressive acquisition strategy, purchasing 34 healthcare distribution companies since the beginning of the 2018 fiscal year. However, the success and benefits of these acquisitions remain uncertain, posing a potential risk.
- Moreover, the firm’s financial health raises concerns due to its history of losses and a negative Return on Equity, despite experiencing significant revenue growth. The apparent need for substantial working capital and ongoing negative cash flows could indicate looming liquidity problems.
- With slim operating margins and negative cash flows, the firm would need to significantly increase its revenue to turn profitable. Considering these issues, it would be prudent for investors to observe the firm’s performance over the next few quarters before deciding to invest.
About the company
Founded in
10 Jan'18
Managing director
Prabhat Agrawal
- Entero Healthcare Solutions Ltd operates as a distributor of healthcare products across India, leveraging a technologically advanced platform to deliver distribution services to a wide array of healthcare institutions including pharmacies, hospitals, and clinics nationwide.
- As of September 30, 2023, the firm boasts a substantial customer base, serving more than 73,700 retail clients and 2,800 hospital clients. It has established supply chains with more than 1,900 manufacturers of healthcare products, enabling it to offer an extensive portfolio of more than 63,900 product SKUs.
STRENGTHS
- Leading Position: In FY22, Entero was among the top three distributors of healthcare products in India by revenue. Additionally, it was the quickest to scale up its operations among its peers in the healthcare products distribution sector in India from FY19 to FY22.
- Remarkable Expansion: The firm demonstrated impressive growth from FY21 to FY23, showcasing a 36% compound annual growth rate (CAGR) in revenue alongside a 72% boost in EBITDA.
RISK FACTORS
- History of Losses: Entero has experienced financial losses over the past three fiscal years, with negative net profit margins during this period. Without significant revenue growth and cost management, the company may continue to face losses.
- Low Profitability Metric: Despite a gradual improvement in Return on Capital Employed, it remains modest at 6.05% for FY23. Additionally, the Return on Equity has been negative over the last three fiscal years.
- Operational Cash Flow Issues: In the six months leading up to September 2023, Entero saw negative cash flow from operations, extending a pattern observed over the previous three years. Ongoing negative cash flows or severe short-term financial difficulties could severely impact the company's operational effectiveness and growth plans.
- Significant Working Capital Requirements: By September 2023, Entero needed substantial working capital, with Rs 782.65 crore in working capital and a total working capital facility limit of Rs 407.70 crore as of November 2023. Failure to secure adequate funding on time could negatively influence the firm’s financial health, operational outcomes, and profitability.
- Equity Pledge Risks: Entero has secured loans by pledging shares of its subsidiaries. If defaults occur under these financing arrangements, lenders may enforce these pledges, negatively impacting the business, operational results, cash flow, and future prospects.
- Collection Risks: Entero is exposed to credit risk from high trade receivables, amounting to Rs 630.49 crore as of September 2023. Although the company employs measures to mitigate default risks, there is no guarantee that payments will be received promptly.
Issue details
Issue type
Mainstream
Issue size
₹ 1,600 crore
Fresh Issue
₹ 1,000 crore
OFS
₹ 600 crore
Price range
₹ 1,195 - 1,258
Lot size
11 shares
Issue Objective
The company intends to utilise the proceeds from the net issue towards:
- Repayment and/ or pre-payment of certain borrowings;
- Funding the long-term working capital requirements;
- Pursuing inorganic growth initiatives through acquisitions; and
- General corporate purposes.
Dates
Bidding open
9 Feb'24
Bidding close
13 Feb'24
Allotment date
14 Feb'24
Refund date
15 Feb'24
Listing
16 Feb'24
IPO Reservations
Qualified institutional buyers
>75%
Non-institutional investors
<15%
Retail individual investors
<10%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
This document has been issued by Liquide Solutions Private Limited for information purposes only. It does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek personal and independent advice regarding the appropriateness of investing in any of the funds, securities, other investment or investment strategies that may have been discussed or referred herein and should understand that the views regarding future prospects may or may not be realized. In no event shall Liquide Life Private Limited and / or its affiliates or any of their directors, trustees, officers and employees be liable for any direct, indirect, special, incidental or consequential damages arising out of the use of information / opinion herein.