Entero Healthcare Solutions Limited is amongst the top three healthcare products distributors in India in terms of revenue in Financial Year 2022, and reported an operating income of Rs 25,220.65 million in Financial Year 2022. Further, they also achieved the fastest scale-up of operations among healthcare products distributors in India (between Financial Year 2019 to Financial Year 2022), and reached Rs 25,000 million of operating income within four years of operations. As of September 30, 2023, company's 77 warehouses located across the country, last-mile delivery infrastructure and relationships with pharmacies, hospitals and clinics enables healthcare product manufacturers to make their products available to a wide range of customers. Similarly, the pharmacies, hospitals and clinics that they service get access to a wide range of healthcare products through the distribution infrastructure and the healthcare product manufacturer relationships. During the Financial Years 2021, 2022 and 2023, and the six months ended September 30, 2023, they catered to over 39,500, 64,200, 81,400 and 73,700 retail customers, respectively, and over 1,600, 2,500, 3,400 and 2,800 hospital customers, respectively. Further, as of September 30, 2023, they have supply relationships with over 1,900 healthcare product manufacturers that gives access to over 63,900 product stock-keeping units ('SKUs'). With the nationwide presence of 77 distribution warehouses located across 38 cities in 19 states and union territories, and a customer base of over 73,700 pharmacies and 2,800 hospitals spread across 501 districts, as of September 30, 2023, they provide vast access to healthcare product manufacturers. Further, healthcare product manufacturers can use the Entero Direct platform to display their products and run promotional offers to promote their brands. As of September 30, 2023, Entero Direct had over 7,700 active users, with sales on Entero Direct aggregating to Rs 2,571.88 million for the six months ended September 30, 2023. As per financial performance, Entero Healthcare Solutions Limited has posted total income / net profits of Rs 1,783.67 Cr / Rs (15.35) Cr (FY21), Rs 2,526.55 Cr / Rs (29.44) Cr (FY22), Rs 3,305.72 Cr / Rs (11.10) Cr (FY23) and Rs 1,898.98 Cr / Rs 11.64 Cr (Q2 FY24). So as per previous financials data, company has shown good sales growth, but making consistent losses. Company has an average EPS of Rs (6.1) and average RoNW of (3.20%) for last three fiscals. Issue is priced at a P/BV of 6.77 as per NAV of 185.84 as on 30.09.23. If we attribute latest earnings of FY22, FY23, TTM and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around (185.85), (492.74), 480.15 and 234.98 respectively, which looks very aggressively priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, five lead managers are associated with this IPO, and have handled around 151 IPOs in last three fiscals. ICICI Securities Limited : This is 58th Main Board IPO from this BRLM. From last 10 Main Board IPOs, three opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 10 Main Board IPOs, four are trading below issue price and remaining are trading above or at par issue price.( As on 06.02.2024 ) DAM Capital Advisors Limited : This is 20th Main Board IPO from this BRLM. From last 10 Main Board IPOs, four opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 10 Main Board IPOs, three are trading below issue price and remaining are trading above issue price. ( As on 06.02.2024 ) Jefferies India Private Limited : This is 8th Main Board IPO from this BRLM. From last 7 Main Board IPOs, one opened below issue price and remaining opened above or at par issue price on the day of listing. As of now, from last 7 Main Board IPOs, two are trading below issue price and remaining are trading above issue price.( As on 06.02.2024 ) JM Financial Limited : This is 47th Main Board IPO from this BRLM. From last 10 Main Board IPOs, two opened below issue price and remaining opened above or at par issue price on the day of listing. As of now, from last 10 Main Board IPOs, two are trading below issue price and remaining are trading above issue price.( As on 06.02.2024 ) Jefferies India Private Limited : This is 23rd Main Board IPO from this BRLM. From last 10 Main Board IPOs, three opened below issue price and remaining opened above or at par issue price on the day of listing. As of now, from last 10 Main Board IPOs, two are trading below issue price and remaining are trading above issue price.( As on 06.02.2024 ) As per financials, Entero Healthcare Solutions Limited has shown poor results, RoNW is (1.86%) and P/E is respectively (185.85), (492.74), 480.15 and 234.98 as per FY22, FY23, TTM and annualised FY24 earnings. So, issue looks very aggressively priced. Company is in business of healthcare products distribution in India. There is good growth opportunity in the sector and performance of BRLM is good. So, we give AVOID rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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