Prashant Jain's 3P buys 2.5% of Entero as margins nearly double
What's the deal? Veteran fund manager Prashant Jain's 3P Investment ManagersDealroom has a profile for this one. Try Dealroom → has picked up a 2.5% stake in Entero Healthcare SolutionsDealroom has a profile for this one. Try Dealroom →, one of India's top three integrated healthcare product distributors by revenue. Entero's shares have risen 60% this year.
What does the company do? Entero runs a pure-play business-to-business platform connecting pharmaceutical manufacturers with retail providers. It carries 83,400 stock-keeping units from more than 3,000 suppliers, reaching 72,000-plus active pharmacies and 2,300-plus hospitals across 475 districts.
Why now? The story beneath the share price is a strategy shift. After building its national footprint through 51 acquisitions since 2018, Entero is pivoting from debt-funded dealmaking to organic, margin-led growth centred on its higher-margin MedTech business.
The numbers: In Q1FY27, revenue rose 38.2% year-on-year to Rs 1,940 crore, while EBITDA surged 94% to Rs 97 crore as margins expanded. The EBITDA margin reached 5%, up from 3.6% a year earlier — hitting the full-year FY27 guidance in the first quarter.
What's the endgame? Management targets an EBITDA margin above 6%, 23% revenue growth in FY27, and 20%-plus compounding growth over the next three to four years. Reducing acquisition-led expansion should lower financing costs and improve the working capital cycle, which shortened to 61 days from 66 days a year ago.
Capital efficiency: Return on capital employed nearly doubled year-on-year to 21.1% from 11.5%, while return on equity rose to 20.4% from 9%. Management plans to convert 50% of EBITDA into operating cash flow, then recycle that internal cash into further acquisitions.
The signal: India's healthcare distribution market remains highly fragmented, with the top three players holding just 8% to 10% — against 90%-plus for leaders in the US and Germany. That gap leaves a long runway for organised platforms such as Entero to consolidate, and 3P's stake is a bet on it.
Read more: ndtvprofit.com
Image credit: Fort George G. Meade
