Entero Healthcare Q4FY26: Cash Flow Turns Positive as Margins Expand and MedTech Scales

Entero Healthcare Solutions Limited closed FY26 with a clear message: scale is starting to show up in profitability and cash generation. The company reported consolidated revenue of INR 6,591.2 crore for FY26, up 29.3 percent year-on-year. EBITDA increased 55.0 percent to INR 266.0 crore, and EBITDA margin improved to 4.0 percent from 3.4 percent in FY25. Profit after tax was INR 145.8 crore, up 35.7 percent.

The more important shift was in cash flows. Operating cash flow (cash from operating activities) turned positive at INR 96.2 crore in FY26 compared with negative INR 76.9 crore in FY25. Q4FY26 alone generated INR 104.6 crore of operating cash flow, supported by improving margins and a reduction in net operating working capital days to 59 from 64 in Q3.

Q4FY26 performance: growth plus margin expansion

In Q4FY26, consolidated revenue came in at INR 1,909.9 crore versus INR 1,339.1 crore in Q4FY25, a 42.6 percent increase. Gross profit grew 58.6 percent to INR 207.4 crore, with gross margin expanding to 10.9 percent from 9.8 percent a year earlier. EBITDA rose 75.9 percent to INR 86.0 crore and EBITDA margin improved to 4.5 percent from 3.7 percent.

Profit after tax for Q4FY26 was INR 45.1 crore, up 43.6 percent. Return ratios also improved sequentially, with ROCE reported at 18.4 percent in Q4FY26 compared with 14.8 percent in Q3FY26.

A key nuance for investors is the split between consolidated profits and profits attributable to shareholders. Non-controlling interest in Q4FY26 was INR 17.1 crore (up sharply from INR 6.2 crore in Q3FY26). On the earnings call, management said this jump was driven by an abnormal contribution from a partially owned subsidiary and is expected to normalise. Management also indicated that minority interest could be around 25 to 27 percent of PAT before minority interest in FY27.

FY26 execution: guidance met, working capital tightened

Management highlighted that the company delivered on all parameters of its FY26 guidance.

First, like-for-like revenue growth was 31.5 percent (versus a 30 percent guidance), adjusting for the one-off impact of revenue recognised on a net margin basis and the divestment of a subsidiary.

Second, EBITDA margin was 4.0 percent for FY26, aligned with guidance. The earnings call linked margin improvement to gross margin expansion, driven by product mix and procurement efficiencies.

Third, operating cash flow reached INR 96.2 crore, close to the company’s stated target of around INR 100 crore.

The operating cash flow bridge provided in the presentation shows that although working capital still consumed cash for the year (change in working capital of negative INR 136.5 crore), it improved significantly from FY25 (negative INR 221.5 crore). This, alongside higher profitability, enabled a return to positive operating cash flow.

Net operating working capital days improved to 68 days in FY26 from 70 days in FY25, and the quarter-on-quarter trend improved further by Q4.

MedTech: from adjacency to a meaningful contributor

FY26 was also positioned as a year of diversification. Entero highlighted meaningful progress in MedTech, supported by three acquisitions completed in the year: Ace Cardiopathy Solutions, Bjoaide Technologies, and Anand Chemiceutics.

The investor presentation states that the MedTech segment, including these acquisitions, is expected to contribute more than INR 1,000 crore in FY27. On the earnings call, management said the segment already contributes more than INR 1,000 crore in annualised revenue and is expected to exceed 15 percent of revenue in FY27, with potential to reach 20 percent over a longer horizon.

Management also explained why MedTech can be margin accretive. Unlike pure distribution, some MedTech contracts involve a broader commercial role where Entero supports demand generation, customer development, service, and installations. The company stated that more than 10 to 15 percent of sales comes from such full commercial role arrangements, which can provide higher gross margins than standard distribution.

Balance sheet and cash flow: growth funded by acquisitions

The balance sheet reflects acquisition-led expansion. Total assets increased to INR 3,600 crore at March 2026 from INR 2,703 crore at March 2025. Goodwill rose to INR 749 crore from INR 424 crore.

Borrowings also increased. At March 2026, non-current borrowings were INR 123 crore and current borrowings were INR 444 crore.

Cash and cash equivalents ended FY26 at INR 146.9 crore versus INR 229.3 crore in FY25. The company reported net cash used in investing activities of INR 303.0 crore in FY26.

On the call, the CFO explained that finance costs increased because IPO funds that had previously been parked in deposits and mutual funds were deployed into acquisitions and working capital, making FY26 other income more representative going forward.

FY27 guidance: lower growth, higher margin focus

Entero’s FY27 guidance points to a shift in emphasis from acquisition-led scaling to profitable growth and integration.

Management guided for 23 percent consolidated revenue growth year-on-year for FY27, excluding new acquisitions. EBITDA margin is guided at 5.0 percent. The company also introduced a cash discipline metric, targeting an EBITDA to operating cash flow conversion ratio of at least 50 percent.

In the Q&A, management stated that the growth guidance includes around 11 percent calendarisation impact from acquisitions completed in FY26, with the remaining growth expected from organic drivers.

Management also stated that the margin guidance factors in pruning lower margin businesses and changes in the mix of revenue recognition for some business lines.

Takeaways

Entero’s FY26 results show measurable progress on the operating model. Margins expanded, operating cash flow turned positive, and return ratios improved. The FY27 guidance raises the bar on profitability and cash conversion, suggesting management wants investors to track not just growth but quality of growth.

At the same time, minority interest volatility and the increasing use of partial ownership structures remain an important lens for shareholders analysing earnings attributable to owners. And with goodwill rising materially, the sustainability of integration outcomes will matter.

If Entero delivers its FY27 targets of 5 percent EBITDA margin and 50 percent EBITDA-to-OCF conversion, FY26 could be seen as the year when scale started converting into financial resilience.