Entero Healthcare: Here’s how management expects to boost its revenue by ₹1,000 Cr

Synopsis: Entero Healthcare Solutions Limited is leveraging GLP-1 demand, MedTech expansion, and industry consolidation to scale rapidly. With an expected Rs. 1,000 crore revenue through inorganic methods, improving margins, and better cash flow visibility, is this under-the-radar player emerging as a key beneficiary of structural shifts in India’s healthcare distribution landscape?

A less noticed part of India’s healthcare system is starting to draw investor interest. A small-cap healthcare distributor is benefiting from rising demand for GLP-1 drugs, rapid growth in medical devices, and a supply chain that is slowly becoming more organised.

With an expected Rs. 1,000 crore revenue through inorganic methods, improving profitability, and better cash flow visibility, this company is quietly building scale in a business that plays a critical role in delivering medicines and medical devices to patients across the country.

About The Company

Entero Healthcare Solutions Limited (Entero) is among India’s fastest-growing and leading healthcare product distribution platforms. Founded in 2018, the company has quickly expanded its footprint to serve over 85,300 retail pharmacies and 2,800 hospitals across 490 districts.

With 113 strategically located warehouses and an extensive last-mile delivery network, Entero partners with more than 2,800 healthcare product manufacturers to offer a PAN-India, technology-driven distribution platform.

Leveraging its proprietary technology, the company seamlessly integrates data intelligence, demand generation, and fulfilment solutions, managing a portfolio of over 83,000 SKUs across 20 states. The shares of Entero are trading at Rs. 966.30 with a market capitalization of Rs. 4,204.46 crore. 

Business Model 

Entero Healthcare operates a differentiated business model that combines both demand fulfilment and demand generation for healthcare products. On the demand fulfilment side, the company provides end-to-end distribution solutions across pharmaceuticals, over-the-counter products, medical devices, nutraceuticals, surgical consumables, and vaccines.

Its distribution network is extensive, reaching over 73,900 pharmacies and 2,400 hospitals in Q2FY26, ensuring that products reach the right channels efficiently. The company also manages imports, central warehousing, redistribution, and last-mile delivery, offering seamless supply chain solutions for healthcare brands.

In addition to distribution, Entero Healthcare provides demand generation through integrated commercial solutions. This includes deploying medical representatives to promote products to doctors, developing marketing strategies, and implementing channel management initiatives to enhance patient access.

The company has collaborated with major healthcare brands, such as Roche, for promotion, marketing, and distribution of nephrology drugs in India, reflecting its capability to handle complex brand partnerships. By integrating demand generation and fulfilment, Entero creates synergies across the value chain, leveraging its wide customer network, robust distribution infrastructure, and strong geographic reach.

The company’s product portfolio spans homecare medical devices, surgical consumables, and rehabilitation products, with key offerings including nebulizers, personal protective and hygiene products, gloves, and other surgical consumables.

It also provides private label solutions for healthcare brands, combining its supply chain and marketing expertise to enhance brand visibility and patient access. This integrated approach positions Entero Healthcare not just as a distributor but as a strategic partner for healthcare manufacturers seeking to maximise reach and efficiency in the Indian market.

Proprietary Technology Platform 

Entero Healthcare leverages its proprietary integrated technology platform and business intelligence tools to drive efficiency and visibility across its distribution ecosystem. The platform offers real-time insights into inventory levels, pricing, order status, outstanding balances, and promotional offers, while enabling one-touch ordering and consolidated ledger management.

It allows healthcare manufacturers to showcase products, run banner ad campaigns, and track secondary sales at a micro-market level, helping optimise marketing and sales strategies. Coupled with a capital-efficient “hub and spoke” warehouse model and technology-enabled fulfilment, the platform enhances operational productivity, reliability, and product availability across the healthcare supply chain.

Well-Proven Acquisition Strategy

Pan-India Consolidation-Led Growth Model

Entero Healthcare follows a clearly defined acquisition strategy aimed at capitalising on consolidation opportunities in India’s fragmented healthcare distribution market.

The company adopts a Pan-India approach to acquiring and integrating smaller regional distributors, supported by a dedicated on-ground acquisition team that continuously identifies potential targets. Its integration-led growth model is designed to be replicable across both existing and new geographies, enabling Entero to scale operations efficiently while improving reach and service levels across markets.

Strong Track Record of Acquired Entities

Entero’s acquisition strategy is backed by a proven track record of accelerating growth in acquired companies. Distributors such as R.S.M Pharma in Bengaluru, Getwell Medicare Solution in Kochi, Galaxystar Pharma Distributors in Mumbai, Vasavi Medicare Solutions in Coimbatore and Madurai, Millennium Medisolutions in Gurugram, and Sesha Balajee Medisolutions in Visakhapatnam delivered revenue growth of approximately 60 percent to 88 percent during FY21 to FY23 following acquisition. This consistent performance highlights the company’s ability to integrate businesses, optimise operations, and scale revenues across regions.

Margin Expansion and Value-Accretive Deal Economics

The company’s acquisition-led growth has also translated into measurable financial benefits. On a proforma basis, recent acquisitions are expected to improve gross margins by 70 to 90 basis points, from 10.2 percent to a range of 10.9 percent to 11.1 percent.

EBITDA margins are projected to expand by 50 to 75 basis points, increasing from 4.0 percent to between 4.5 percent and 4.75 percent. Importantly, these acquisitions have been executed at EV to EBITDA multiples in the single digits, in line with earlier transactions, ensuring that growth remains value-accretive.

Rs. 1,000 Crore Acquisition Pipeline on Track

Entero is firmly on track to achieve its target of over Rs. 1,000 crore in revenue contribution from acquisitions. During H1FY26, the company closed three acquisitions valued at Rs. 215 crore, followed by two additional acquisitions in October FY26 worth Rs. 330 crore. A further two acquisitions with a combined value of Rs. 480 crore are expected to be completed in H2FY26.

MedTech-Focused Expansion Driving Future Scale

The acquisition mix is strategically focused towards MedTech, which accounts for 61 percent of total acquisitions, followed by geographic expansion at 19 percent, specialty pharma at 13 percent, and trade generics at 7 percent. 

Between July and October 2025, Entero closed five acquisitions primarily in the MedTech segment, with proforma revenues based on FY25 financials of approximately Rs. 545 crore.

In addition, binding agreements and MOUs have been signed for two MedTech-focused entities, Anand Chemiceutics and Bioaide Technologies, subject to due diligence. On a full-year basis, the company expects to close more than Rs. 1,000 crore of revenue acquisitions, with around 60 percent concentrated in MedTech. Including prior acquisitions and organic growth, the MedTech business is expected to cross Rs. 1,000 crore in revenue post integration.

MedTech As A Growth Driver

Large and Fast-Expanding Industry Opportunity

The MedTech industry represents a significant and rapidly expanding opportunity, with market size estimated at USD 13 to 13.5 billion in FY25 and projected to grow to USD 45 to 50 billion by FY35.

This long-term growth trajectory is being driven by rising healthcare penetration, increasing use of medical devices, and growing demand for diagnostics and specialised treatments. The scale and growth profile of the industry make it an attractive focus area for Entero as it looks to diversify beyond traditional pharmaceutical distribution.

Rs. 1,000 Crore MedTech Revenue Target and Margin Upside

Entero expects its MedTech revenues to cross Rs. 1,000 crore on an annualised basis following the integration of existing and announced MedTech acquisitions. Based on FY25 financials of the announced acquisitions, which are expected to be completed in the second half of the financial year, the company estimates a positive proforma impact of 70 to 90 basis points on gross margins and 50 to 75 basis points on EBITDA margins once fully integrated.

This combination of scale and margin expansion positions MedTech as a key growth and profitability driver for Entero over the medium term. With these acquisitions, Entero is building a diversified MedTech portfolio spanning diagnostic consumables and equipment, cardiology and orthopaedic medical devices, and other medical devices and consumables.

This wider product presence enhances cross-selling opportunities, strengthens relationships with hospitals and healthcare providers, and reduces dependence on any single MedTech sub-segment, further supporting sustainable growth.

Value-Creative Acquisition Framework in MedTech

The valuation approach for MedTech acquisitions remains disciplined, with transactions executed at EV to EBITDA multiples similar to those seen across pharmaceutical distribution deals.

Many regional MedTech distributors seek a partner that can help them scale nationally, having largely exhausted standalone growth opportunities. Additional factors such as succession challenges also motivate sellers to partner with a larger platform. 

Importantly, Entero acquires entire organisations, including management teams and long-standing relationships with doctors and hospitals. Past acquisitions, such as Peerless Biotech in Chennai in the IVD and medical devices space, illustrate this approach.

The goodwill paid reflects the transfer of domain expertise, relationships, and teams, which are critical in MedTech segments where trust and clinical relationships play a central role.

Key Financial Metrics

Optimising working capital remains a core operational focus for the company, with tangible progress achieved over recent quarters. Net working capital days declined to 63 days in Q2 FY26, improving from around 69 days a year ago and 66 days in Q1 FY26.

This improvement has been driven by tighter credit monitoring, stronger collection practices, and a data-led approach to inventory planning across the organisation. Management expects to exit FY26 with working capital days close to 60, which is likely to support healthy operating cash flows of over Rs. 100 crore for the full year.

The company has also reported a steady improvement in return metrics. Return on capital employed increased to 13.8 percent in Q2 FY26 from 11.5 percent in the previous quarter, while return on equity rose to 11 percent compared with 9 percent in Q1. These improvements reflect better asset utilisation, margin expansion, and improving operating leverage as scale increases.

Profitability metrics strengthened during the quarter, with EBITDA margin reaching 4 percent, marking an expansion of 38 basis points quarter-on-quarter and 69 basis points year-on-year. EBITDA stood at Rs. 62 crore, reflecting a 46 percent increase over the same period last year.

Management expects further improvement in EBITDA margins following the completion and integration of new acquisitions, as outlined in the proforma disclosures shared in the investor presentation.

Revenue for the quarter grew 20.8 percent year-on-year and 11.9 percent quarter-on-quarter to Rs. 1,571 crore. On a like-for-like basis, adjusted for contracts accounted for on a net margin basis, revenue growth stood at 23.4 percent year-on-year, while organic growth was 13.4 percent year-on-year. The company also managed the GST transition in September smoothly, despite operating a large and diverse product portfolio across more than 100 warehouses.

GLP-1 Opportunity

On the GLP-1 opportunity, the company is actively engaging with all major manufacturers in this category and is already working closely with global players such as Eli Lilly and the makers of Wegovy. With only two GLP-1 drugs currently available in the market, the company has established a meaningful presence in this high-value segment. As semaglutide goes off patent next year and more manufacturers enter the space, GLP-1 products are expected to become a broader part of the company’s portfolio.

Given its nationwide distribution reach and the limited availability of these high-value therapies, the company believes its market share in GLP-1 drugs is likely higher than its overall market share across pharmaceuticals. GLP-1 therapies also follow a more direct-to-patient model, with sales taking place through both online channels and offline retail networks, enabling wider patient access.

Management remains optimistic about the growth potential of GLP-1 therapies, viewing them as a meaningful long-term opportunity not only for the company but for the healthcare distribution industry as a whole.

Future Outlook

Network Expansion and Growth Visibility

Entero’s distribution network continues to strengthen through wider geographic reach, a broader product portfolio, and deeper engagement with healthcare product manufacturers and customers.

The company is leveraging its proprietary technology platform to improve integration, efficiency, and customer experience through better fill rates and faster turnaround times.

As it enters the second half of the year, management remains confident in sustaining strong momentum, supported by both organic initiatives and the impact of acquisitions. MedTech additions provide further headroom for growth and margin expansion, and the company reiterated that it remains on track to meet its FY26 guidance.

Growth Catch-Up and Acquisition Execution

On a like-to-like basis, growth in the first half stood at 27.8 percent, slightly below the guided level of around 30 percent due to delays in closing new inorganic deals. With acquisition announcements completed, the company is fast-tracking closures in the second half and expects to narrow this gap, bringing full-year growth closer to guidance.

Operating Cash Flow and Working Capital Focus

Operating cash flow was negative at around Rs. 57 to 60 crore in the first half, driven by higher working capital needs in Q2, which is typically the peak growth quarter. Management remains confident of generating Rs. 150 to 160 crore in operating cash flows in the second half, supported by historically strong H2 performance, improved working capital discipline, and benefits from the GST rate change, which provides a 7 percent cash flow advantage.

Revenue Drivers and FY26 Visibility

For FY26, revenue growth will be driven by organic growth, the full-year impact of last year’s acquisitions, and partial contributions from deals closed during the year. The full Rs. 1,000 crore revenue impact from new acquisitions will accrue in the next financial year, providing clear visibility into sustained growth beyond FY26.

Conclusion

Entero Healthcare Solutions is steadily positioning itself as a key beneficiary of multiple structural shifts in India’s healthcare ecosystem. The combination of rising GLP-1 demand, a fast-expanding MedTech market, and a disciplined, value-accretive acquisition strategy gives the company a clear pathway to scale revenue while improving margins and cash flows.

With an incoming revenue of Rs. 1,000 crore through inorganic growth, improving working capital efficiency, and technology-led execution, Entero is transitioning from a regional distributor into a national healthcare platform.

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