Entero Q2FY27 EBITDA Margin Hits 5.3% on 20% Organic Growth

Entero Healthcare Solutions Limited increased its Q2FY27 EBITDA margin by 135 basis points year on year to 5.3%, while like-for-like organic revenue growth reached 20.0%. EBITDA rose 78% to Rs 110.7 crore from Rs 62.1 crore as revenue increased 33% to Rs 2,087.1 crore, supported by a 126-basis-point rise in gross margin.

What drove Entero's Q2FY27 EBITDA margin expansion?

Entero's EBITDA margin increased to 5.3% in Q2FY27 from 4.0% in Q2FY26 because gross margin rose to 11.5% from 10.2%. Gross profit increased 49% to Rs 240.0 crore, compared with revenue growth of 33% to Rs 2,087.1 crore. EBITDA means earnings before interest, tax, depreciation and amortisation.

Cost of goods sold rose to Rs 1,847.1 crore in Q2FY27 from Rs 1,410.1 crore a year earlier, while employee expenses increased to Rs 69.8 crore from Rs 58.2 crore. Other expenses rose to Rs 58.6 crore from Rs 39.5 crore. Even with these higher operating costs, EBITDA increased by Rs 48.6 crore year on year to Rs 110.7 crore.

How fast did Entero grow organically in Q2FY27?

Entero delivered 20.0% like-for-like organic growth in Q2FY27, up from 13.4% in Q2FY26 and 19.6% in Q1FY27. Like-for-like growth includes revenue recorded on a net-margin basis and the divestment of a subsidiary. This measure was higher than the reported organic-growth rate of 18.2% for Q2FY27.

Reported revenue growth was 32.9% in Q2FY27, comprising 18.2% organic growth and 14.7% inorganic growth, which the presentation attributes entirely to calendarisation. Entero completed no acquisitions during the quarter. The company said organic growth ran ahead of the Indian pharmaceutical market, or IPM, although it was moderated by a conscious exit from certain low-margin businesses.

How did Entero's Q2FY27 profit compare with last year?

Entero's consolidated profit after tax rose 66% to Rs 60.7 crore in Q2FY27 from Rs 36.6 crore in Q2FY26, and the profit-after-tax margin increased to 2.9% from 2.3%. Profit before tax increased 76% to Rs 78.4 crore, while finance costs rose to Rs 20.3 crore from Rs 9.7 crore.

Profit after tax attributable to owners was Rs 45.5 crore in Q2FY27, up 44% from Rs 31.6 crore a year earlier. Non-controlling interest was Rs 15.2 crore, compared with Rs 5.0 crore in Q2FY26. Basic earnings per share increased to Rs 10.47 from Rs 7.26, while diluted earnings per share increased to Rs 10.45 from Rs 7.25.

Did Entero's first-half performance support the quarterly trend?

Entero's H1FY27 EBITDA margin was 5.2%, up 139 basis points from 3.8% in H1FY26, extending the Q2FY27 margin improvement. H1FY27 revenue increased 35% to Rs 4,027.6 crore, gross profit rose 54% to Rs 461.3 crore, and EBITDA increased 85% to Rs 207.7 crore from Rs 112.1 crore.

H1FY27 like-for-like revenue growth was 37.2%, while like-for-like organic growth was 19.8%. Reported revenue growth was 35.4% and reported organic growth was 18.0%, with inorganic growth of 17.4% entirely from calendarisation. Profit after tax rose 69% to Rs 112.8 crore and its margin increased to 2.8% from 2.2%.

What changed in Entero's working capital and returns?

Entero reported net operating working capital of 64 days in Q2FY27, compared with 61 days in Q1FY27 and 63 days in Q2FY26. Management attributed the quarter-on-quarter increase to timing in trade receivables on a contract. For H1FY27, net operating working capital was 66 days, down from 68 days in H1FY26.

Operating cash flow was negative Rs 46.5 crore in H1FY27 because of the timing of trade receivables on certain government contracts. Management said the collection was received in November and that operating cash flow would have been positive if it had arrived on its due date. Return on capital employed was 22.0% in Q2FY27 versus 21.1% in Q1FY27, while return on equity was 22.4% versus 20.4%.

What is Entero planning in MedTech?

Entero expects FY27 MedTech revenue to cross Rs 1,000 crore, according to the investor presentation. Its current business and acquisition focus is on in-vitro diagnostics and cardiology and orthopaedic devices. The presentation describes MedTech as synergistic with pharmaceutical distribution and identifies a consolidation opportunity among distributors.

Entero made no new acquisitions in Q2FY27 or in H1FY27, despite the stated acquisition rationale in MedTech. In H1FY27, the company served more than 92,200 retailer customers, compared with more than 85,300 in H1FY26, while its warehouse count increased to 148 from 113. Its hospital customer base exceeded 2,900, compared with more than 2,800 a year earlier.

Conclusion

Entero's Q2FY27 results combined higher revenue scale with wider gross and EBITDA margins. Revenue increased 33%, gross margin rose 126 basis points to 11.5%, and EBITDA margin increased 135 basis points to 5.3%. The 20.0% like-for-like organic growth rate was above the 13.4% recorded in Q2FY26, while calendarisation accounted for the quarter's 14.7% inorganic growth.

The next disclosed markers are delivery against full-year guidance, which management said it was on track to meet comfortably, and the effect of November collections on cash conversion after H1FY27 negative operating cash flow of Rs 46.5 crore. Progress toward MedTech revenue exceeding Rs 1,000 crore in FY27 and any acquisitions in the identified device segments are also matters to watch.