Entero Healthcare Solutions Limited — Q2 FY26 earnings call

Call held 13 Nov 2025

Management summary

Entero Healthcare Solutions delivered a strong Q2 FY26, marked by robust revenue growth, significant margin expansion, and improved working capital efficiency. The company is aggressively expanding its MedTech segment through strategic acquisitions, which are expected to further boost margins and growth. Management reiterated its FY26 guidance, confident in achieving targets despite H1 delays, driven by organic initiatives and the full impact of recent acquisitions.

Highlights

  • Revenue grew by 20.8% YoY to INR1,571 crores in Q2 FY26.

  • Adjusted revenue growth was 23.4% YoY, with organic growth at 13.4% YoY.

  • EBITDA margin reached 4% in Q2 FY26, expanding by 69 basis points YoY.

  • PAT increased 41% YoY to INR37 crores, with PAT margin at 2.3%.

  • Net working capital days improved to 63 days in Q2 FY26 from 69 days a year ago.

  • Closed five MedTech acquisitions in July-October 2025 with proforma revenues of INR545 crores.

  • On track to close INR1,000 crores plus revenue acquisitions in FY26, with 60% in MedTech.

  • Confident of achieving over INR100 crores in operating cash flow for FY26.

Key financials

  1. Revenue ₹1,571 Cr +20.8%YoY
  2. Adjusted Revenue Growth 23.4%
  3. Organic Growth 13.4%
  4. Gross Profit ₹161 Cr +32%YoY
  5. Gross Profit Margin 10.2% +0.84%YoY
  6. EBITDA ₹62 Cr +46%YoY
  7. EBITDA Margin 4% +0.69%YoY
  8. PAT ₹37 Cr +41%YoY
  9. PAT Margin 2.3%
  10. Net Working Capital Days 63 days
  11. Return on Capital Employed 13.8%
  12. Return on Equity 11%

What they filed

Q1 FY27: revenue up 38.2%, net profit up 73.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,301 1,359 1,339 1,404 1,571 +21%1,707 +26%1,910 +43%1,940 +38%
EBITDA42 50 49 50 62 +48%68 +36%86 +76%97 +94%
Net profit26 29 31 30 37 +42%34 +17%45 +45%52 +73%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • MedTech
    ₹400 Cr Current Revenue₹600 Cr Acquisition Revenue (FY26)14% Post-consolidation Business Share

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY26 · High confidence 30%
    we will be very close to the full year guidance on like-to-like basis.

    — Prabhat Agrawal

  • H2 Revenue Growth Revenue · H2 FY26 · High confidence 31%
    on the second half of the year, the revenue growth has to be 31% to achieve a 30% overall growth for the year.

    — Prabhat Agrawal

Operating Cash Flow

  • Operating Cash Flow Operating Cash Flow · FY26 · High confidence INR100 crores plus
    This should aid us in delivering strong positive operating cash flow for the year in the range of INR100 crores plus.

    — Prabhat Agrawal

Working Capital

  • Net Working Capital Days Working Capital · FY26 · High confidence around 60 days
    We are confident of closing FY26 with working capital days of around 60.

    — Prabhat Agrawal

Acquisitions

  • Revenue from Acquisitions Acquisitions · FY26 · High confidence INR1,000 crores plus
    on track to close INR1,000 crores plus revenue acquisitions through 7 M&A transactions.

    — Prabhat Agrawal

  • Acquisition Spending Acquisitions · H2 FY26 · High confidence Upwards of INR400 crores
    Upwards of INR400 crores.

    — Prabhat Agrawal

Profitability

  • EBITDA Margin (post acquisitions) Profitability · Next year · Medium confidence 4.5% to 4.75%
    if we were at Q2 at 4%, then post closing of these deals, we should be between 4.5% to 4.75%.

    — Prabhat Agrawal

  • EBITDA Margin (current year) Profitability · FY26 · High confidence 4% plus
    the margins this year, as we have guided that we should be closing 4% plus.

    — Prabhat Agrawal

Risks & concerns

  • Delay in closing new inorganic deals

    medium

    Delay in closing new inorganic deals in H1 FY26 caused a 2.5% gap in revenue growth against the 30% annual guidance, which the company aims to catch up in H2.

    Management acknowledged

  • Increased interest costs

    low

    Interest cost increased due to utilization of IPO money for acquisitions and milestone-related payables, leading to a lower cash balance.

    Management acknowledged

  • Increase in other expenses

    low

    Other expenses increased due to reclassification of certain commission expenses and ECL provisions (around INR3 crores in H1).

    Management acknowledged

Areas of evasion (2)

  • Total estimated SKUs in the pharma industry
  • Revenue split by Tier-wise

Q&A highlights

3 direct
Achieving FY26 Revenue Growth Guidance Direct
on a like-to-like basis, we were 27.8% growth, and against a guidance of let's say, 30%. So, the gap of 2.5% is primarily coming from delay in closing new inorganic deals, which we are now trying to catch up in the second half of the year... we will be very close to the full year guidance on like-to-like basis.

Clarifies the reason for H1 growth being slightly below annual guidance and outlines the strategy (accelerated inorganic deals in H2) to bridge the gap, providing confidence in meeting the full-year target.

Asked by Chintan Sheth

MedTech Acquisition Valuations and Margin Impact Direct
On EV to EBITDA basis, we are on the ballpark with respect to our historical multiples that we have paid... The margin in this business is double digit.

Explains the rationale behind MedTech acquisitions (higher margins, value-added role, national scale opportunity for sellers) and confirms that valuations are consistent with historical multiples, despite higher EV/Sales due to better margins.

Asked by Sajal Kapoor

Impact of GST Changes on Revenue and Cash Flow Direct
I estimate that probably our revenue growth would have been 1% higher, if that GST change would not have happened... the positive impact on cash flow from GST change would happen in H2 of this year... the receivable itself will fall by close to about 13%.

Quantifies the short-term negative impact of GST transition on Q2 revenue growth and clarifies the positive impact expected on cash flow and receivables in H2 FY26 due to lower GST rates.

Asked by Bhargav

3 min read 6 chapters

Detailed narrative

Strong Q2 FY26 Performance Driven by Growth and Margin Expansion

Entero Healthcare reported a robust Q2 FY26, with revenue growing by 20.8% year-on-year and 11.9% quarter-on-quarter to INR1,571 crores. Adjusted for contracts, revenue growth stood at 23.4% YoY, while organic growth was 13.4% YoY, approximately 1.8x the IPM growth rate. Gross profit increased 32% YoY to INR161 crores, with margins improving by 84 basis points YoY to 10.2%. EBITDA margin reached 4%, up 69 basis points YoY, leading to a 46% YoY growth in EBITDA to INR62 crores. Profit after tax grew 41% YoY to INR37 crores, expanding the PAT margin to 2.3% from 2% in Q2 FY25.

Accelerated MedTech Segment Expansion through Strategic Acquisitions

A key strategic focus is the expansion into the high-growth MedTech segment. The company closed five acquisitions during July-October 2025, adding proforma revenues of approximately INR545 crores based on FY25 financials. With binding agreements for two more MedTech-focused entities, Entero is on track to close over INR1,000 crores in revenue acquisitions in FY26, with about 60% in MedTech. These acquisitions are expected to significantly enhance margins, with an estimated positive impact of 70-90 basis points on gross margin and 50-75 basis points on EBITDA margin on a proforma basis. Post-consolidation, MedTech is projected to represent 14%-15% of the business, with EBITDA margins expected to reach 4.5%-4.75% after full integration.

Continued Working Capital Optimization and Positive Cash Flow Outlook

Entero Healthcare demonstrated continued progress in optimizing working capital, with net working capital days improving to 63 days in Q2 FY26, down from 66 days in Q1 and 69 days a year ago. This improvement is attributed to enhanced credit monitoring, collection discipline, and data-driven inventory planning. Management expressed confidence in closing FY26 with working capital days around 60, which is expected to drive strong positive operating cash flow. The company targets generating over INR100 crores in operating cash flow for the full year FY26, with H2 expected to be significantly positive after a negative H1.

Reiteration of FY26 Guidance and H2 Growth Drivers

Management reiterated its FY26 guidance for 30% revenue growth on a like-to-like basis, acknowledging that H1 growth was 27.8% due to delays in closing new inorganic deals. To achieve the full-year target, H2 revenue growth needs to be approximately 31%. The company is fast-tracking the closure of announced deals and expects to be very close to the full-year guidance. Growth will be driven by organic initiatives, the full-year impact of last year's acquisitions, and the partial impact of deals closed during FY26. The company also expects to close FY26 with an EBITDA margin of 4% plus.

Impact of GST Transition and GLP-1 Opportunity

The GST transition in September 2025 had a minor impact on Q2 revenue growth, estimated to have reduced it by approximately 1%. However, this change is expected to have a positive impact on cash flow in H2 FY26, as billing to customers will shift from 12% GST to 5% GST, leading to a roughly 13% fall in receivables. Additionally, Entero is actively engaging with GLP-1 drug manufacturers like Eli Lilly and Wegovy, seeing it as an attractive, high-growth opportunity for the entire industry, where Entero's nationwide reach and high-value product portfolio position it favorably.

Technology Integration and Operational Efficiency

Entero has invested significantly in developing its in-house ERP and customer interface systems (Entero Direct app) to drive operational efficiency and customer experience. This proprietary technology enables seamless integration with various platforms, faster order processing, and improved fill rates. The system provides clear visibility of inventory across 113 warehouses and 83,000+ SKUs, facilitating efficient inventory management and inter-warehouse transfers. The company continuously develops new features, such as the HealthEdge app, to enhance customer engagement and loyalty programs.

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