Entero Healthcare Solutions Q4 FY '24 Earnings Conference Call Summary
Key Financial Highlights
• Total Operating Revenue: Increased by 19% to INR 39,223 million.
• FY '24 Revenue: Reported at INR 3,922 crores.
• Q4 Revenue Growth: 17% year-on-year increase.
• EBITDA Growth: 42% increase in Q4 and 75% for the full fiscal year.
• Profit After Tax: INR 40 crores, a turnaround from previous year's loss.
Growth Strategy
• Acquisitions: Completed 35 acquisitions since inception; targeting INR 1,000 crores in acquisitions for FY '25.
• Recent Acquisitions: 80% stake in Avenir Lifecare and three distributors expected to contribute INR 170 crores in annualized revenue.
• Revenue Growth Target: Management aims for 35% to 40% growth in FY '25.
Operational Insights
• Working Capital: Remains stable; fluctuations due to acquisitions and GST inclusion.
• EBITDA Margin Improvement: 100 basis point increase attributed to gross margin improvements and operating expenses management.
• Product Mix Focus: Shift towards higher-margin products, including specialty medicines and medical devices.
Market Position and Future Plans
• Market Share Gains: Significant increases in various cities; organic growth target of 20%.
• Retailer Reach: Aiming for 200,000-250,000 retailers in the next 2-3 years.
• Trade Generics: Currently a small but growing segment of the business.
Financial Management and Acquisitions
• Acquisition Economics: Payback period of 2-2.5 years for goodwill; acquisitions valued on an EV/EBITDA multiple basis.
• Cost Structure: Most employee expenses are fixed; visibility of leverage expected to improve from FY '25.
Conclusion
• Management Confidence: Strong outlook for future financial performance and continued growth through strategic acquisitions and operational improvements.

Submission Details
• Date of Submission: March 15, 2024
• Recipient: BSE and NSE
• Content: Transcript of Earnings Conference Call held on March 11, 2024
• Signatory: Jayant Prakash, General Counsel and Compliance Officer
Company Overview
• Founded: 2018
• Core Business: Healthcare product distribution in India
• Network: Serves over 79,400 pharmacies and 3,300 hospitals
• Warehouses: 78 across 19 states
Financial Highlights
• Q3 FY '24 Revenue: Rs. 993 crores (20% YoY increase)
• EBITDA: Rs. 29 crores (54% increase)
• Profit After Tax: Rs. 7 crores (96% increase)
• Nine Months FY '24 Revenue: Rs. 2,888 crores (20% YoY increase)
• EBITDA for Nine Months: Rs. 83 crores (90% increase)
• Profit After Tax: Rs. 19 crores (positive from previous loss)
Growth Strategy
• Recent IPO: Completed in February 2024, raising Rs. 1,000 crores
• Acquisitions: 34 strategic acquisitions in the past five years
• Target EBITDA Margin: Over 5% in the next 2-3 years
• Organic Growth Rate Target: 20%
Market Position
• Current Ranking: Second-largest distributor in India
• Market Dynamics: Fragmented pharma retail industry with limited consolidation potential
• Future Focus: Targeting smaller distributors for acquisitions
Operational Efficiencies
• Improved Working Capital Days: Reduced to 66
• Return on Capital Employed (ROCE): Increased to 10.3%, with expectations to exceed 20% in coming years
Q&A Highlights
• Market Insights: Acquiring distributors in new cities provides valuable insights
• Debt Management: Current leverage at 30-40% with room for additional debt
• Margin Improvement: Focus on scale, procurement efficiency, and product mix
• Competition: Larger players face challenges in the healthcare distribution sector
Conclusion
• Management's Commitment: Focus on distribution without retail expansion
• Future Engagement: Open invitation for further inquiries through Investor Relations Advisors