💰 Financial Performance

Revenue Growth by Segment

Total revenue for Q2 FY26 reached INR 1,571 Cr, representing a 20.8% YoY growth. On a like-to-like basis, adjusted for contracts on a net margin basis, revenue growth was 23.4% YoY. Organic revenue growth stood at 13.4% YoY, which is 1.8x the Indian Pharmaceutical Market (IPM) growth rate of 7.3%. The MedTech segment is projected to cross INR 1,000 Cr in annualized revenue following the integration of recent acquisitions.

Geographic Revenue Split

Not specifically disclosed by region, but the company operates a massive portfolio across 100-plus warehouses nationwide to service various geographies.

Profitability Margins

Gross margin for Q2 FY26 improved to 10.2%, up 84 bps YoY and 29 bps QoQ. PAT margin expanded to 2.3% in Q2 FY26 from 2.0% in Q2 FY25. Profit After Tax (PAT) grew 41% YoY to INR 37 Cr. These improvements are driven by a shift toward higher-value categories like MedTech and trade generics.

EBITDA Margin

EBITDA margin reached 4.0% in Q2 FY26, an improvement of 69 bps YoY and 38 bps QoQ. EBITDA for the quarter was INR 62 Cr, up 46% YoY. The company expects a further proforma impact of 50 to 75 bps on EBITDA margins once all MedTech acquisitions are fully integrated.

Capital Expenditure

The company utilized INR 193 Cr of IPO proceeds for inorganic growth through acquisitions as of March 31, 2025, with INR 44 Cr remaining for this purpose. Acquisitions are funded through a mix of internal accruals, cash balance, and some debt addition.

Credit Rating & Borrowing

The company utilized INR 142.5 Cr of IPO proceeds for the full repayment/prepayment of certain borrowings. Interest was paid back during the reversal of specific territory transactions, though specific interest rate percentages are not disclosed.

⚙️ Operational Drivers

Raw Materials

As a healthcare distributor, 'raw materials' consist of pharmaceutical products, medical devices, diagnostic consumables, and equipment (cardiology and orthopedic devices).

Import Sources

Not disclosed in available documents; however, the company services products across 100+ warehouses in India.

Key Suppliers

The company distributes for various pharmaceutical and MedTech manufacturers; specific supplier names are not listed, but they carry a 'massive product portfolio'.

Capacity Expansion

Expansion is focused on warehouse reach and segment depth. The company closed 5 acquisitions between July and October 2025 to expand into the MedTech segment.

Raw Material Costs

Gross profit stood at INR 161 Cr (+32% YoY). Procurement efficiency and operational cost optimization contributed to an 84 bps YoY improvement in gross margins.

Manufacturing Efficiency

Not applicable as a distributor; however, operational efficiency is measured by the improvement in RoCE, which rose to 13.8% in Q2 FY26 from 11.0% YoY.

Logistics & Distribution

The role of the distributor in MedTech is more value-added (commercial role), allowing for higher margin pools compared to standard distribution.

📈 Strategic Growth

Expected Growth Rate

30%

Growth Strategy

The 30% revenue growth guidance for FY26 will be achieved through a combination of organic growth (currently 13.4%) and aggressive inorganic expansion. The company is fast-tracking the closure of acquisitions in the MedTech and trade generics segments to bridge the 2.5% gap seen in H1 FY26 growth (27.8% like-to-like vs 30% target).

Products & Services

Pharmaceutical products, trade generics, diagnostic consumables, diagnostic equipment, cardiology medical devices, and orthopedic medical devices.

Brand Portfolio

Entero Healthcare Solutions; the company also operates through various acquired subsidiaries in the MedTech and distribution space.

New Products/Services

Expansion into MedTech (consumables and equipment) and trade generics, which are higher growth and margin accretive.

Market Expansion

Significant expansion in the MedTech segment through 5 new acquisitions closed in H2 2025. The company aims to scale its digital and technology infrastructure to improve healthcare access across India.

Market Share & Ranking

The company's organic growth of 13.4% is 1.8x the Indian Pharmaceutical Market (IPM) growth of 7.3%, indicating significant market share gains.

Strategic Alliances

The company utilizes acquisitions rather than JVs, targeting single-digit EV/EBITDA multiples for all new deals.

🌍 External Factors

Industry Trends

The MedTech industry is high-growth and offers higher margin pools for distributors who take on commercial roles. The industry is shifting toward organized distribution and digital infrastructure to improve supply chain efficiency.

Competitive Landscape

The company competes in a fragmented distribution market but is consolidating its position through acquisitions at attractive single-digit multiples.

Competitive Moat

Moat is built on a massive scale (100+ warehouses), a diversified product portfolio (Pharma + MedTech), and a data-driven approach to inventory and credit, which reduced working capital days by 6 days YoY.

Macro Economic Sensitivity

Sensitive to the growth of the Indian Pharmaceutical Market (IPM), which grew at 7.3% during the period.

Consumer Behavior

Chemists reportedly reduced procurement between August 15 and September 15, 2025, due to GST changes, yet Entero maintained 20.8% revenue growth through effective transition management.

Geopolitical Risks

Not specifically mentioned, though the company focuses on the domestic Indian healthcare market.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to the Companies Act 2013, Ind AS, and GST regulations. The company successfully navigated the GST transition in September 2025 across its 100+ warehouses.

Taxation Policy Impact

Direct taxes paid (net of refund) amounted to INR 25.9 Cr in H1 FY26 compared to INR 14.1 Cr in H1 FY25.

Legal Contingencies

The Secretarial Audit Report for FY ended March 31, 2025, reported that the company has adequate systems to ensure compliance with applicable laws and that all board decisions were carried unanimously with no dissenting views.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the timing and integration of inorganic deals; a delay in closures resulted in a 2.5% gap relative to the 30% growth guidance in H1 FY26.

Geographic Concentration Risk

Not disclosed, but the company operates 100+ warehouses, suggesting broad domestic diversification.

Third Party Dependencies

The company is dependent on pharmaceutical and MedTech manufacturers for supply, though its 'massive portfolio' across 100+ warehouses suggests a diversified vendor base.

Technology Obsolescence Risk

The company is actively investing in digital, data, and technology infrastructure to mitigate the risk of falling behind in supply chain automation.

Credit & Counterparty Risk

The company has implemented ongoing initiatives around credit monitoring and enhanced collection discipline, successfully reducing working capital days to 63.