Entero Healthcare Solutions IPO Review

Entero Healthcare Solutions IPO is on the way to raise Rs 1,600.00 crores. The issue is a combination of fresh issue of 0.79 crore shares aggregating to Rs 1,000.00 crores and offer for sale of 0.48 crore shares aggregating to Rs 600.00 crores. Entero Healthcare Solutions is a wholesale distribution healthcare platform which caters to retail pharmacies, hospitals, nursing homes, clinics, and physicians.

IPO opensFeb 09, 2024
IPO ClosesFeb 13, 2024
IPO Size (Rs.)₹1,600.00 Cr
IPO Size (shares)12,718,600 shares
BreakupFresh issue ₹1000 Cr + OFS ₹600 Cr
Face Value:₹10 per share
IPO Price in Rs.₹1195 to ₹1258 per share
Minimum Lot11 Shares
Listing AtNSE , BSE
QIB ~75 %
NII Quota~15
Retail Quota~10%
 Lead ManagerICICI Securities, DAM Capital, Jefferies India ,JM Financial, SBI Capital Markets
RegistrarLinkintime

About Entero Healthcare Solutions Limited:

  • Entero Healthcare Solutions Limited was incorporated in 2018. 
  • Entero is a wholesale distribution healthcare platform which caters to retail pharmacies, hospitals, nursing homes, clinics, and physicians.
  • IIt also offers marketing and promotion services, patient support & access services to pharmaceutical and medical device companies.
  • Entero Healthcare Solutions also provides technology solutions to retailers and distributors across the pharma value chain to help them with management, inventory management etc.
  • Entero has nationwide presence of 77 distribution warehouses located across 38 cities in 19 states and union territories, and a customer base of over 73,700 pharmacies and 2,800 hospitals spread across 501 districts, as of September 30, 2023.

Entero Healthcare Solutions: Financials

Particulars/ Rs. Cr.H1Fy24H1Fy23230320222021
Revenue from Operations1,895.501,583.973,300.212,522.071,779.74
Revenue Growth (%)19.67%30.85%41.71%
EBITDA54.3725.0364.0124.4421.55
EBITDA Margin (%)2.87%1.58%1.94%0.97%1.21%
Profit before Tax13.67-7.15-3.69-19.81-10.84
Net Profit for the period11.64-10.86-11.1-29.44-15.35
Share Capital16.074.114.113.850.1
Instruments  equity in nature702.64660.5663.61618.99517.11
Reserves-61.08-72.42-72.7-61.8-31.85
Net Worth as stated660.55594.67597.66563.22487.06
EPS – Basic & Diluted (₹)2.95-3.04-3.1-9.22-5.29
RONW (%)1.76%-1.83%-1.86%-5.23%-3.15%
Net Asset Value (₹)#185.84174174.21171.95183.16
Post issue Share Capital45.04    
FV10.0    
IPO price1,258.0    
EPS Fy23    
PE Fy23    
EPS Fy24 (annualized)6.1    
PE Fy24  (annualized)207.2    
Market cap in cr5,666.0    
Market cap / Sales1.72    

Anchor: Entero Healthcare Solutions

Entero Healthcare Solutions has collected Rs 716 crore from anchor investors. The company allotted a total of 56.95 lakh equity shares to 25 funds at Rs 1,258 per share. The anchor book saw participation from investors, like Capital Group, Government of Singapore, Monetary Authority of Singapore, Amundi Funds New Silk Road, Societe Generale, Morgan Stanley Asia (Singapore) Pte, Goldman Sachs (Singapore) Pte, and Copthall Mauritius Investment Ltd., Bajaj Allianz Life Insurance Company, SBI General Insurance, and Jupiter India Fund etc.

Entero Healthcare Solutions: Salient Points

  • Those selling shares in OFS include promoters Prabhat Agrawal, Prem Sethi, and OrbiMed Asia III Mauritius Ltd.
  • The company claims to be among the top three healthcare product distributors in India in terms of revenue in FY22.
  • Entero has achieved fastest scale up of operations among the healthcare products distributors in India (between fiscal 2019 to fiscal 2022). Entero reached ₹2,500 crore operating income within 4 years of operations. Entero leverages technology to provide a positive buying experience through their digital solutions such as the Entero Direct B2B application (“Entero Direct”),
  • Entero is among the Top-3 healthcare products distributor in India to have wide network reach with retail pharmacies in India. Entero catered to 39,500+, 64,200+, 81,400+, 65,000+ and 73,700+ retail pharmacies in fiscal 2021, fiscal 2022, fiscal 2023, 6 months ended September 2022 and 6 months ended September 2023, respectively.
  • Entero has the largest hospital customer network among the pharmaceutical products distributors in India. Entero catered to 1600+, 2,500+, 3,400+, 2,400+ and 2,800+ hospital customers in fiscal 2021, fiscal 2022, fiscal 2023, 6 months ended September 2022 and 6 months ended September 2023, respectively.
  • The market share for Entero in Indian pharmaceutical and medical devices distribution industry (total size: 2,66,904 crore) is 1.24% as of fiscal 2023.
  • They have entered into an agreement with Roche Products (India) Pvt Ltd for the promotion, marketing, and distribution of its 4 nephrology drugs in India.
  • Peers:

    Company Name

    CMP

    Revenues (cr)

    P/E

    P/B

    RoE (%)

    Mcap (cr)

    Mcap/ sales

    Entero Healthcare Solutions

    1,258.0

    3,300.21

    213

    7.54

    5,666.0

    1.72

    Medplus Health Services

    627

    4558

    128

    5

    3.5

    7,499

    1.65

  • The valuation looks high in comparison to that of its listed peer.
  • Company turned profitable for first time in H1FY24
  • Its business is working capital heavy.
  • Entero Healthcare Solutions is coming at a PE ratio of 207 fy24 annualized earnings. It reported loss in FY23.
  • My chances of applying in Entero Healthcare Solutions IPO are quite low. I am not comfortable with its valuations.
  • GMP as heard on Social Media may be around Rs. 5.
  • Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.

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