Entero Healthcare Q4 Review: Jefferies Downgrades To 'Hold' Amid Lower Guidance

Jefferies has downgraded Entero Healthcare Solutions Ltd. to 'hold' following fourth quarter performance and lower-than-expected guidance for FY26. The brokerage firm cited lower organic growth and a subdued margin profile as key reasons for the downgrade.

Entero Healthcare's fourth quarter results fell short of expectations, with revenue at Rs 1,339 crore, marking a 29.5% year-on-year increase but still 6% below Jefferies' estimates. Ebitda rose by 69.3% to Rs 49 crore, while net profit increased by 22.5% to Rs 26 crore. Despite these gains, the Ebitda margin remained flat quarter-on-quarter at 3.6%.

"After a hiatus of nearly six months, Entero announced acquisition of six distributors...even with these acquisitions, Entero's FY26 guidance of 30% upside in sales growth and 4% increase in Ebitda margin is below our expectations," Jefferies said.

However, acquisitions would help expand Entero's geographical reach and further add to its portfolio. The new acquisitions, like past ones, will be margin accretive to the business, the brokerage said.

Acquisitions would help expand Entero's geographical reach and further add to its portfolio in the areas of trade generics, specialty pharma, medical consumables and devices, the brokerage noted.

The company reported an increase in retail customers to 95,300 from 86,300 in FY24, and a rise in SKUs to 80,600 from 68,900. The number of districts covered reached 500, up from 482, and warehouses increased to 101 from 79 last year.

Jefferies has lowered the price target to Rs 1,320, based on 25 times Mar-27 EPS. The downgrade reflects the slower pace of acquisitions and lower organic growth.

"Our FY26 revenue estimates decline by 3% and FY27 revenue estimates decline BY 10% and EPS estimates decline by 15% for FY26 and 20% for FY27, on lower growth and margin assumptions," Jefferies said.