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ICICI Securities Report
Brokerage firm ICICI Securities has initiated coverage on Entero Healthcare Ltd. with a Buy rating and a target price of Rs 2,100, valuing the company at 17x FY28E EV/Ebitda at a 10% premium to our valuation for Keimed due to Entero's superior growth and margin profile.
At current market price the stock trades at 28.6x FY28E and 22.8x FY29E earnings and 13.9x FY28E and 11x FY29E EV/Ebitda.
According to the brokerage, Entero has rapidly established its presence in the fragmented pharmaceutical product distribution market in India and, within a span of eight years, has ranked among the top three distributors of healthcare products in India.
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It operates at a superior margin profile (4% for Entero vs 2-3% for others) compared with its peer group in India and overseas.
It has a strong M&A track record, having acquired 22 entities in the last four years which account for ~29% of its FY26 revenue.
After establishing its pan-India footprint in the drug distribution market, Entero has recently entered into the distributor-dominated medical devices market. The brokerage notes this is helping Entero boost growth, improve margins and reduce the working capital cycle.
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