Concall AI

Entero Healthcare Solutions Limited — Q3 FY26 earnings call

Call held 13 Feb 2026

Management summary

Entero Healthcare Solutions delivered a strong Q3 FY26, with revenue growing 26% YoY and EBITDA up 36% YoY, driven by robust organic growth and strategic MedTech acquisitions. The company demonstrated improved operational efficiency, reflected in better working capital days and positive operating cash flow. Management expressed confidence in achieving full-year guidance for both OCF and EBITDA margins, despite the need for significant Q4 performance.

Highlights

Revenue of INR1,707 crores, up 26% YoY and 9% QoQ.
Organic growth was 17.1% year-on-year, the highest for this financial year.
Gross profit came in at INR173 crores, up 29% year-on-year, with gross margins improving by 30 basis points to 10.1%.
EBITDA for the quarter was INR68 crores, representing a growth of 36% year-on-year, with margins improving by around 30 basis points to 4%.
Operating Cash Flow (OCF) was INR49 crores in the quarter, with a target of INR100 crores for the full year.

Concerns

One-time exceptional impact of INR6.1 crores on PAT due to new labor code.
Interest cost increased due to acquisitions, with IPO funds almost used.
Q4 needs 35% revenue growth and 4.5% EBITDA margin to meet full-year guidance.

Key financials

2 periods

Headline

Revenue
₹1,707 Cr
YoY +26% QoQ +9%
Gross Profit
₹173 Cr
YoY +29%
Gross Margin
10.1%
YoY +0.3% QoQ -0.1%
EBITDA
₹68 Cr
YoY +36%
EBITDA Margin
4%
YoY +0.3%
PAT
₹34 Cr
YoY +15%
Adjusted PAT (excl. labor code)
₹40 Cr
YoY +36%
Net Working Capital Days (like-to-like)
61 days
Return on Capital Employed (ROCE)
14.8%
Return on Equity (ROE) excl. labor code
12.3%

Q3

Operating Cash Flow
₹49 Cr

What they filed

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

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	1,301	1,359	1,339	1,404	1,571 +21%	1,707 +26%	1,910 +43%	1,940 +38%
Expenses	1,258	1,309	1,290	1,354	1,509	1,639	1,824	1,844
EBITDA	42	50	49	50	62 +48%	68 +36%	86 +76%	97 +94%
Margin	3%	4%	4%	4%	4%	4%	5%	5%
Other income	11	8	7	6	5	-4	4	3
Interest	11	10	10	11	12	14	17	21
Depreciation	7	8	8	9	10	10	15	12
Profit before tax	35	39	37	36	45 +29%	40 +3%	58 +57%	67 +86%
Tax rate	25%	25%	16%	17%	18%	16%	22%	22%
Net profit	26	29	31	30	37 +42%	34 +17%	45 +45%	52 +73%
EPS	5.43	5.85	5.90	6.39	7.26	6.35	6.44	8.77

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
₹1,000 Cr Annualized Revenue (post-integration)15% Share of Business
Generic and Private Label
— Share of Business

Capital allocation

Capex Capex disclosed
- One warehouse ₹30 lakh
So capex point of view, it's very minimal compared to the revenues that we generate from that warehouse. Probably to do one warehouse, you would not need more than INR30-40 lakhs of capex.
Debt Net ₹200 Cr

So net debt is at about INR200 crores. And we had cash of about INR250 crores.
M&A Anand Medilink Acquisition · Closed

expands distribution reach, widens product segments, builds new capabilities (IVD, Cardiology, POCT devices, lab consumables)
Positive impact of 70 to 90 bps on gross margin and 50 to 75 bps on EBITDA margin on a pro forma basis

Now coming to inorganic growth progress. We closed acquisitions of Anand Medilink in Pune, Ace Cardiopathy, Bioaide Technologies and Anand Chemiceutics in MedTech segment. Each of these acquisitions further expands our distribution reach, widens our product segments and builds new capabilities for us. Particularly in MedTech segment, we have added scale in IVD, Cardiology, POCT devices, lab consumables, etc.
M&A Ace Cardiopathy Acquisition · Closed

expands distribution reach, widens product segments, builds new capabilities (IVD, Cardiology, POCT devices, lab consumables)
Positive impact of 70 to 90 bps on gross margin and 50 to 75 bps on EBITDA margin on a pro forma basis

Now coming to inorganic growth progress. We closed acquisitions of Anand Medilink in Pune, Ace Cardiopathy, Bioaide Technologies and Anand Chemiceutics in MedTech segment. Each of these acquisitions further expands our distribution reach, widens our product segments and builds new capabilities for us. Particularly in MedTech segment, we have added scale in IVD, Cardiology, POCT devices, lab consumables, etc.
M&A Bioaide Technologies Acquisition · Closed

expands distribution reach, widens product segments, builds new capabilities (IVD, Cardiology, POCT devices, lab consumables)
Positive impact of 70 to 90 bps on gross margin and 50 to 75 bps on EBITDA margin on a pro forma basis

Now coming to inorganic growth progress. We closed acquisitions of Anand Medilink in Pune, Ace Cardiopathy, Bioaide Technologies and Anand Chemiceutics in MedTech segment. Each of these acquisitions further expands our distribution reach, widens our product segments and builds new capabilities for us. Particularly in MedTech segment, we have added scale in IVD, Cardiology, POCT devices, lab consumables, etc.
M&A Anand Chemiceutics Acquisition · Closed

expands distribution reach, widens product segments, builds new capabilities (IVD, Cardiology, POCT devices, lab consumables)
Positive impact of 70 to 90 bps on gross margin and 50 to 75 bps on EBITDA margin on a pro forma basis

Now coming to inorganic growth progress. We closed acquisitions of Anand Medilink in Pune, Ace Cardiopathy, Bioaide Technologies and Anand Chemiceutics in MedTech segment. Each of these acquisitions further expands our distribution reach, widens our product segments and builds new capabilities for us. Particularly in MedTech segment, we have added scale in IVD, Cardiology, POCT devices, lab consumables, etc.
Liquidity Cash ₹250 Cr

So net debt is at about INR200 crores. And we had cash of about INR250 crores.

Guidance & targets

Profitability

Operating Cash Flow (FY26) Profitability · FY26 · High confidence INR100 crores

I'm confident that we are on track to deliver operating cash flow for the year in the range of INR100 crores through improvement in EBITDA margin profile and initiatives being undertaken to further optimize working capital.

— Prabhat Agrawal
EBITDA Margin (FY26) Profitability · FY26 · High confidence north of 4%

Yes. So I think now all the eyes will be on quarter 4, because everyone can work out this math that on a full year guidance and subtract 9 months actual, so what is it that needs to be done in quarter 4 to achieve the full year numbers and we are on track to deliver our full year guidance.

— Prabhat Agrawal
Operating Cash Flow (Q4 FY26) Profitability · Q4 FY26 · High confidence over INR100 crores

Yes, that's what we are shooting for, Dev.

— Prabhat Agrawal
EBITDA Margin (Q4 FY26) Profitability · Q4 FY26 · High confidence 4.5%

So to meet that guidance, we'll have to cross 4.5% in EBITDA in Q4 alone. Are you still holding on to that guidance of achieving a 4% EBITDA margin? Yes. So I think now all the eyes will be on quarter 4...

— Dev (analyst) / Prabhat Agrawal
Accumulated Losses Utilization Profitability · next year · Medium confidence utilized

So, if you look at the losses, probably we will utilize all those losses maybe by next year.

— Balakrishnan Kaushik

Revenue

Like-to-like revenue growth (FY26) Revenue · FY26 · High confidence 30%

So coming first to answer your question on this year, which I answered also previously in this call, that Q4, we can work out the math. And you are right in your math that to deliver 30% like-to-like, we'll have to grow 35% in quarter 4.

— Prabhat Agrawal
Revenue growth (Q4 FY26) Revenue · Q4 FY26 · High confidence 35%

— Prabhat Agrawal
MedTech Segment Annualized Revenue Revenue · post-integration · High confidence over INR1,000 crores

As I have already guided, post-completion and integration of all these businesses, annualized revenue will cross over INR1,000 crores in MedTech segment.

— Prabhat Agrawal

Margin

MedTech Gross Margin Impact Margin · pro forma after integration · High confidence 70 to 90 bps positive

There will be a positive impact of 70 to 90 bps on gross margin and 50 to 75 bps on EBITDA margin on a pro forma basis after all the acquisitions are integrated with us.

— Prabhat Agrawal
MedTech EBITDA Margin Impact Margin · pro forma after integration · High confidence 50 to 75 bps positive

— Prabhat Agrawal

Working Capital

Working Capital Days Working Capital · ongoing · High confidence towards 60 days

Yes. I mean what we are saying is we are on track to deliver that INR100 crores of OCF.

— Prabhat Agrawal

Tax

Effective Tax Rate (FY26) Tax · FY26 · High confidence 18%

But for this financial year, we are holding on to our 18% of effective tax rate.

— Balakrishnan Kaushik

Performance

FY27 Performance Performance · FY27 · Medium confidence far better than FY26

So, your first question, on FY27, I'm not giving the guidance, except that I can only say that FY27 is going to be far better than FY26, given the fact that a lot of work we have done in the second half of FY26 is going to have a full year impact for next year.

— Prabhat Agrawal

What to watch in Q4 FY26

Q4 FY26 Operating Cash Flow

next quarter (Q4 FY26 results)

Current INR49 crores (Q3 FY26)

Target >INR100 crores (Q4 alone) to reach FY26 target of INR100 crores

Why it matters

Key indicator of operational efficiency and financial health, crucial for meeting full-year guidance.

Yes, that's what we are shooting for, Dev.

Risks & concerns

Meeting Q4 FY26 Financial Targets
high

To meet full-year guidance, Q4 FY26 requires 35% revenue growth, 4.5% EBITDA margin, and over INR100 crores in OCF, which are significant targets.

Analyst acknowledged
Integration of Recent Acquisitions
medium

The company has made 'big moves' in acquisitions this year and will focus on integrating them for the next few quarters, which requires operational focus and could present challenges.

Management acknowledged
Increased Interest Costs
low

Interest costs have gone up due to investments in acquisitions, and IPO funds are almost used, which could impact net profitability.

Management acknowledged

Q&A highlights

6 direct

MedTech Growth Strategy & Margins Direct

I believe that in MedTech segment, you can grow much faster without a lot of inorganic acquisitions because unlike pharma in MedTech, you can do a lot of pan-India exclusive distribution deals... the companies also depend on distributors to grow sales. And for that, they kind of -- if you grow their business, they are ready to part with more margins with distributors.

Clarifies the strategic approach to MedTech growth and the inherent margin advantages in this segment compared to traditional pharma distribution.

Asked by Avnish Tiwari

FY26 CFO & EBITDA Margin Targets Direct

Yes, that's what we are shooting for, Dev... Yes. So I think now all the eyes will be on quarter 4, because everyone can work out this math that on a full year guidance and subtract 9 months actual, so what is it that needs to be done in quarter 4 to achieve the full year numbers and we are on track to deliver our full year guidance.

Management explicitly confirms commitment to aggressive Q4 performance to meet full-year CFO (INR100 crores) and EBITDA margin (>4%) guidance, implying a Q4 OCF of >INR100 crores and 4.5% EBITDA margin.

Asked by Dev

Future Acquisitions & Capital Allocation Direct

So broadly, we have completed all the big acquisitions now. As of now, we are not looking forward to raise any equity capital. There could be some movement in debt, but overall, we are not looking to do more meaningful acquisitions from here on. I think next few quarters, we will spend in consolidating what we have acquired because we have made big moves in this financial year.

Provides clear guidance on capital allocation strategy, indicating a pause in significant M&A for integration and cash flow focus, with no immediate plans for equity raise.

Asked by Dev

Impact of New Labor Code on Employee Costs Direct

So, what we have recognized under exceptional is the past service cost, which is a one-time cost. Going forward, we don't expect the numbers to materially affect our overall margins. We don't expect that.

Clarifies that the INR6.1 crores impact from the new labor code is a one-time exceptional item, alleviating concerns about recurring pressure on future margins.

Asked by Chintan Sheth

MedTech Segment Financial Impact Partial

So Bhargav, we have not disclosed product-wise margins. But we have given you a pro forma impact of that, like 70 to 90 basis points improvement over on an overall basis for us, on the gross margin and 50 to 75 basis point improvement on the EBITDA on an overall company basis.

Management provides the overall company-level margin uplift from MedTech acquisitions but avoids disclosing segment-specific margins, leaving some detail undisclosed.

Asked by Bhargav Buddhadev

Organic Growth Levers & Sustainability Direct

This is basically the core of our business. Why should we grow faster than the industry or why should we grow faster than our competitors. And this is totally dependent on the value proposition that we offer to our customers... We offer to our customers a very huge product portfolio... our service levels to him in the sense that we are delivering 2 to 3 times per day. We are running our warehouses 24/7.

Details the fundamental drivers of Entero's organic growth and competitive advantage, emphasizing its value proposition and operational efficiency.

Asked by Reshab Sisodiya

Effective Tax Rate & Accumulated Losses Direct

So currently, we have certain losses available to us carry forward losses on account of which currently you are seeing the effective tax rate at about 18%. As and when those losses get completely consumed, the tax rate obviously will slowly go up a bit. But for this financial year, we are holding on to our 18% of effective tax rate... So, if you look at the losses, probably we will utilize all those losses maybe by next year.

Explains the reason for the lower effective tax rate and provides a timeline for the utilization of accumulated losses, which will impact future tax rates.

Asked by Vansh Solanki

GLP-1 Products & Competitive Impact Partial

Yes, Pranay, one, we have to look at our base. Our base is today more than INR7,000 crores annual revenue. So, any one particular product is not going to make a very meaningful change in our growth profile or anything like that... So overall, the market is going to expand. But how much it will impact our own growth, I don't think so any very meaningful part I can estimate right now.

Addresses concerns about competition in the GLP-1 segment, indicating that while new players may emerge, the overall market expansion and Entero's large base will mitigate significant impact on its growth.

Asked by Pranay Roop Chatterjee

2 min read 6 chapters

Detailed narrative

Strong Q3 FY26 Performance Driven by Organic Growth

Entero Healthcare Solutions reported a robust Q3 FY26, with revenue growing 26% year-on-year and 9% quarter-on-quarter to INR1,707 crores. The company's organic growth stood at an impressive 17.1% year-on-year, significantly outpacing the industry's 12% growth and marking the highest organic growth for this financial year. This strong performance led to a 29% year-on-year increase in gross profit to INR173 crores, with gross margins improving by 30 basis points to 10.1%.

EBITDA and Profitability Expansion

The company's EBITDA for Q3 FY26 reached INR68 crores, reflecting a 36% year-on-year growth, and EBITDA margins improved by 30 basis points to 4%. Despite a one-time exceptional impact of INR6.1 crores on PAT due to a new labor code, adjusted PAT grew 36% over last year to INR40 crores, with an adjusted PAT margin of 2.3%. Reported PAT stood at INR34 crores, a 15% year-on-year increase, with a 2% reported PAT margin.

Strategic MedTech Segment Expansion and Margin Accretion

Entero completed key acquisitions in the MedTech segment, including Anand Medilink, Ace Cardiopathy, Bioaide Technologies, and Anand Chemiceutics. These acquisitions are expected to boost the MedTech segment's annualized revenue to over INR1,000 crores post-integration, representing approximately 15% of the total business. Management anticipates a positive impact of 70 to 90 basis points on overall gross margins and 50 to 75 basis points on overall EBITDA margins on a pro forma basis after the integration of these MedTech businesses.

Improved Working Capital and Cash Flow Generation

The company demonstrated significant improvements in working capital management, with like-to-like Net Working Capital (NWC) days improving to 61 days in Q3 FY26 from 66 days in Q1. This focus on efficiency contributed to a positive Operating Cash Flow (OCF) of INR49 crores in the quarter. Management expressed confidence in achieving the full-year OCF target of INR100 crores, driven by continued EBITDA margin expansion and working capital optimization.

Future Capital Allocation and Growth Strategy

Management indicated a strategic shift towards consolidating recent acquisitions and optimizing operations for the next few quarters, rather than pursuing new 'meaningful acquisitions.' While some debt movement is possible, the company is not planning any new equity capital raises. The focus will be on improving margins and cash flows, with new acquisitions potentially being considered in FY28 after the current integration phase. The company also confirmed that FY27 performance is expected to be 'far better than FY26' due to the full-year impact of acquisitions made in H2 FY26.

Robust Operational Moat and Market Reach

Entero highlighted its strong operational moat, serving over 97,600 retail pharmacies and more than 3,000 hospitals across 505 districts in India, supported by 131 strategically located warehouses. The company sources over 89,200 SKUs from more than 3,100 healthcare manufacturers. This extensive network and value proposition, including 2-3 deliveries per day and 24/7 warehouse operations, enable it to grow faster than the industry and consolidate buying for retailers.

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