Jefferies maintained its 'buy' rating on Entero Healthcare Solutions Ltd. and hiked the target price to Rs 1,500 from Rs 1,350. The current market price is Rs 1,280, and the revised target price implies an upside of about 17.18%.
Jefferies said Entero reported a mixed quarter. The March-quarter revenue stood at Rs 19.1 billion, up 43% YoY and 12% QoQ, and was 6% above estimates. The Ebitda came in at Rs 0.9 billion, up 76% YoY and 27% QoQ, which was 15% above estimates
The brokerage said higher minority interest is a one-off and should reduce in FY27. The organic growth for the quarter stood at around 17% YoY, adjusted for the impact of revenue recorded on a net margin basis and divestment of a subsidiary.
For FY27, management provided a robust outlook, indicating revenue growth of 23%, of which 11% is expected from calendarisation of recent acquisitions. Ebitda margins should improve 100bps YoY to 5%, helped by improving gross margins due to increasing contribution from the medtech business, noted the brokerage firm.
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Jefferies said Entero's medtech segment is expected to cross Rs 10 billion in FY27 as the business has better margins and longer payable days, which help the company improve the working capital cycle.
The brokerage firm said that the company is also well placed to capitalise on GLP-1 sales, with its cold-storage distribution network expected to help it gain a disproportionate share.
Jefferies has cut FY27 EPS by 6% on higher depreciation and tax rate, while raising FY28 EPS by 3% on improved profitability. It increased the target multiple to 27x from 25x and has thus maintained a 'buy' rating with a price target of Rs 1,500.
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