Entero Healthcare Solutions Limited IPO Review

Entero Healthcare Solutions Limited IPO : The IPO issue of Rs looming. 1600 Cr will open on February 9, 2024. The issue will close on February 13 and be listed on the exchange on February 16, 2024. In this article, we will look at Entero Healthcare Solutions Limited IPO Review 2024 and analyze its strengths and weaknesses. . Read on to find out!

Entero Healthcare Solutions Limited IPO

About Us

Entero is one of the top three healthcare product distributors in India by revenue. The company was founded in 2018 by Prabhat Agrawal, who wanted to create a pan-India technology platform for integrated healthcare products.

As of FY23, the company owns 73 warehouses across the country and will distribute to pharmacies, clinics and hospitals in its network. The company serves more than 81,400 retail customers and more than 3,400 hospitals year-round. Over 1900 medical product manufacturers supply over 64,500 stock storage units.

The company is a solution for India’s fragmented distribution system, where pharmacy chains typically operate only regionally, unlike in developed markets. Having a national distribution network reduces the amount of work manufacturers have to do with dealing with a small number of companies like Entero.

The company also leveraged technology to create a direct B2B application for Entero Direct. The application allows customers to check product range, stock levels, order status, promotional offers and outstanding balance in real time.

Over the past five years, the company has been quite aggressive in securing market share through inorganic business expansion. Entero has acquired more than 32 medical product distributors to date.

Industry introduction

According to the United Nations, the global average age has increased from 20 in 1970 to 30 in 2020. India’s average age was the lowest at 30.9 years, compared to 37.5 and 39.5 in the United States. uk.

Global health spending has been increasing along with economic growth. Personal healthcare spending is also increasing as sedentary jobs increase and the risk of chronic disease rises.

However, public spending on health services in India is much lower compared to other countries around the world. India’s healthcare spending in 2020 was 3% of GDP. It lags behind developing countries such as Brazil, Nepal, Singapore, Sri Lanka, Malaysia and Thailand.

India’s per capita health spending (based on international dollar exchange rates adjusted for purchasing power parity) was only $57 in 2020, compared to $11,702 in the United States, $5,619 in Canada, $3,031 in South Korea, and $4,927 in the United Kingdom. In Singapore it was $3,537.

In terms of government spending as a percentage of GDP, India spends about 2.2% on healthcare. This includes health expenditure by central and state governments.

The Indian healthcare industry, comprising pharmaceuticals, hospitals, medical devices, diagnostics and health insurance sectors, has grown exponentially at a CAGR of 10-11% from FY17 to FY23. Last year, the industry was valued at around 500 billion won. 9.9 Lakh Chrome

The market is expected to register a CAGR of 11-12% between FY23 and FY28, with aging population, rising incidence of lifestyle diseases, increasing healthcare awareness, rising technology adoption, and growing affluent middle class acting as key drivers. Reached ₹16.5 – 17.5 Lakh Cr in FY28.

Entero Healthcare Solutions – Finance

The company reported revenue of Rs. 3300 Cr in FY23, up 31% from Rs. 2522 Cr in FY22. Sales have been growing steadily at a CAGR of 36% since FY21.

Eterno continues to post losses. However, the loss was reduced significantly to a loss of Rs. 29 Cr in FY22, with a loss of only Rs. 11Cr in FY23.

The decrease in net loss is due to a decrease in purchasing costs.

In FY21, purchasing costs were 95% of the company’s total revenue, and continued to fall to 92% of revenue in FY23. Continuing to reduce these costs will increase the company’s profitability.

main players

Entero currently has only one competitor: MedPlus Health Services. MedPlus is a profitable company with earnings per share of Rs. 4.17. The company’s return on equity is just 3.36%. However, because Entero has not yet made a profit, its return on equity is also negative.

(Source: Company RHP)

Company Strengths

1. Market Opportunity: The Indian healthcare market is highly fragmented, making it tedious for pharmaceutical manufacturers to deal with multiple distributors. Manufacturers will benefit from market consolidation resulting from Entero’s growth.
2. Rapid expansion: The company has been rapidly expanding its footprint, either through acquisitions or organically. It already has a strong presence in Pan-India where it supplies through 73 warehouses.
3. Take advantage of technology: The company has built a proprietary technology platform that makes it easy for B2B customers to do business. The platform has all the integrated business tools to help you serve your customers and manage orders.
4. Massive Presence: Entero is India’s largest and fastest growing healthcare products distributor. Since its founding in 2018, the company has established itself as a strong name in healthcare distribution.
5. Experienced Management: The promoters of the company Prabhat Agrawal and Prem Sethi are qualified professionals with deep knowledge of the healthcare products sector.

company’s weaknesses

1. Loss factors: The company has consistently reported losses over the past three years due to write-offs of scaled-back ancillary businesses and the need to maintain significant inventory.
2. Huge working capital environment: The company operates a business that requires significant working capital investments and has taken on debt to maintain liquidity.
3. Risks arising from inorganic growth: The company recently embarked on a merger and acquisition. The outcome of these acquisitions and the synergies they create remain uncertain and therefore subject to risk.
4. Aggressive expansion risks: Entero has been expanding its presence and building its warehousing capabilities and supply chain network across India. The operational efficiency of these new capacities remains uncertain.
5. Committed shares of subsidiaries: Entero has pledged a 100% stake in both companies. If the stock collateral prevents the company from repaying the loan, the company may lose its rights to the subsidiary.

Entero Healthcare Solutions – GMP

As of this writing, the gray market premium for the stock was Entero and has not yet been announced. We will update the article with our respective expectations as soon as GMP is updated.

Key IPO Information

promoter: Prabhat Agrawal, Prem Sethi and Orbimed Asia III Mauritius Ltd

Book Operations Lead Manager: ICICI Securities Ltd., DAM Capital Advisors Ltd., Jefferies India Pvt Ltd., JM Financial Ltd and SBI Capital Markets Ltd.

Proposal registered by: Link Intime India Pvt Ltd

purpose of the problem

1. Repayment/prepayment of certain borrowings of the company.
2. Financing the long-term working capital requirements of the Company and its subsidiaries during fiscal years 2025 and 2026.
3. Pursuing inorganic growth initiatives through acquisitions.
4. General corporate purposes.

conclusion

Entero Healthcare Solutions is well positioned to benefit from the current fragmented pharmaceutical distributor market situation in India. With this in mind, the company has been very aggressive in its organic and inorganic growth.

The company’s pan-India presence, strong technology platform and experienced management team are by far its greatest strengths. However, the massive costs and working capital requirements coupled with aggressive expansion increase the risk of investing in the company.

Nonetheless, the company is reducing its net loss and the net proceeds from each IPO will be used to fund working capital requirements and long-term debt. So do you think Entero will be profitable by next year? Also, are you planning to apply for this IPO? Let us know in the comments below.

Written by Nasir Hussein

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