Entero Healthcare soars after India Ratings upgrades rating to 'A-'

India Ratings and Research stated that the rating upgrade reflects continued strong growth in Entero group's scale of operations and operating profitability in FY24, with significant growth in its revenue and an improvement in the EBITDA margin and Ind-Ra's expectation of further growth in FY25 and over the medium term, backed by the heavy capital infusion into the company.

In February 2024, Entero raised Rs 1,000 crore from its initial public offer (IPO) for funding expansion through acquisitions and managing its intense working capital requirement over the medium term.

Backed by the unutilised amounts from the IPO proceeds, the group was net cash positive at FYE24 with a significant reduction in its overall debt levels due to the full repayment of Entero's long-term debt in March 2024.

The continued expansion into newer geographies strengthening its pan-India presence and growth in customer and product portfolio during the year also support the rating.

The rating is, however, constrained by the inherent limitations of distributorship and the inherent risks of the pharmaceuticals industry.

The negative free cash flows since inception, and the group's brief track record of operations also constrain the rating.

Entero Healthcare Solutions is a supply-chain partner and aggregator for pharmaceutical products, medical equipment, and surgical consumables.