Entero Healthcar

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.

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.

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.

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.

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.

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.