Entero Healthcare Solutions reported a strong third quarter for FY26, with revenue growing 26% YoY to INR1,707 crores. The company is focused on integrating recent MedTech acquisitions, which are expected to contribute significantly to FY27 performance. Management confirmed they are on track to meet FY26 guidance for Operating Cash Flow and EBITDA margins, despite a one-time labor code impact on PAT.
Q3 FY26 Performance Snapshot
Entero Healthcare Solutions announced robust performance for Q3 FY26. Total revenue reached INR1,707 crores, marking a 26% year-on-year (YoY) growth and 9% quarter-on-quarter (QoQ) growth. On a like-to-like basis, revenue grew 28.5% YoY, with organic growth at 17.1% YoY, outpacing the industry growth rate of 12%.
Gross profit increased by 29% YoY to INR173 crores, with gross margins improving by 30 basis points (bps) to 10.1% compared to last year. EBITDA for the quarter stood at INR68 crores, reflecting 36% YoY growth, with margins improving by approximately 30 bps year-over-year.
Profit and Working Capital Efficiency
Reported Profit After Tax (PAT) for the quarter was INR34 crores (a 15% YoY increase). Management noted an exceptional impact of INR6.1 crores from the new labor code affecting PAT. Adjusted for this one-off, PAT margin was 2.3%, with PAT at INR40 crores (a 36% YoY growth).
A key highlight was the improvement in working capital management. Net Working Capital (NWC) days improved to 61 days on a like-to-like basis in Q3 FY26, down from 66 days in Q1. Operating Cash Flow (OCF) for the quarter was a positive INR49 crores, putting the company on track to deliver full-year OCF in the range of INR100 crores.
Operational Reach and Inorganic Progress
Operationally, the company services over 97,600 retail pharmacies and more than 3,000 hospitals across 505 districts, supported by 131 warehouses and over 89,200 SKUs.
In terms of inorganic growth, the company successfully closed several acquisitions in the MedTech segment, including Anand Medilink, Ace Cardiopathy, Bioaide Technologies, and Anand Chemiceutics. Management guided that post-integration, the annualized revenue from the MedTech segment will cross INR1,000 crores, expected to positively impact overall gross margin by 70 to 90 bps and EBITDA margin by 50 to 75 bps pro forma.
Guidance and Forward Outlook
Management indicated a strategic slowdown in new acquisitions over the next 2-3 quarters to focus on consolidating recent integrations, improving margins, and optimizing cash flows. The full impact of the acquisitions completed in the second half of FY26 is expected to be visible in the next financial year (FY27). Management stated they are on track to deliver the full-year guidance for OCF and EBITDA margin.
Q&A Highlights
MedTech Growth Levers
Regarding the MedTech segment, growth acceleration is anticipated primarily through pan-India exclusive distribution deals, leveraging the company’s existing infrastructure and relationships with large manufacturers like Abbott and Roche. Furthermore, the company sees potential for launching its own private labels over time.
Competition and Margins
In response to competition, management noted that the distributor acquisition landscape remains fragmented, with only 2 or 3 major buyers for available targets. Regarding margin dynamics, the MedTech segment distributors play an active role in demand creation, allowing for potentially better pricing terms compared to the brand-driven pharmaceutical segment.
Tax Rate and Debt Position
CFO Balakrishnan Kaushik clarified that the current effective tax rate is around 18%, primarily due to the utilization of carry-forward losses. As these losses are consumed, the tax rate is expected to move toward the standard corporate rate. Net debt as of quarter end was approximately INR200 crores, with cash on hand around INR250 crores.
Source: BSE
