Entero Healthcare shares make weak market debut, list at 1% discount over issue price

Shares of Entero Healthcare Solutions Ltd on Friday got listed at Rs 1,245 on BSE, a discount of 1.03 per cent over its issue price of Rs 1,258. At this price, the company commanded a market capitalisation (m-cap) of Rs 5,414.97 crore. The stock has been admitted to dealings on the exchange in the list of 'B' group securities. The stock got listed at Rs 1,228.70 on NSE, down 2.33 per cent as against its IPO price.

The Rs 1,600 crore-initial public offer (IPO), which was open between February 9 and February 13, was sold in the Rs 1,195-Rs 1,258 price band.

The IPO had received a muted response from investors, with the quota reserved for non institutional investors getting undersubscribed. The issue had asked for a PE of 111.2 times at the upper price band based on FY24E earnings. Overall, the IPO was subscribed 1.53 times.

Entero Healthcare is a distributor of healthcare products in India through its technology-driven platform to pharmacies, hospitals, and clinics throughout India. The company had reserved shares worth Rs 8 crore for its eligible employees, who got a discount of Rs 119 per share during the bidding.

Ahead of its IPO, it has mobilised Rs 716.4 crore from anchor investors as it allocated of 56,94,753 shares at a price of Rs 1,258 apeice including Marquee investors including Smallcap World Fund Inc, Government of Singapore, Monetary Authority of Singapore, Carmignac Portfolio, CLSA Global, Societe Generale, Morgan Stanley, Goldman Sachs, and Copthall Mauritius Investment.

Post-listing view

"Entero's initial public offering (IPO) witnessed a negative debut. This underwhelming performance fell short of pre-listing expectations and highlighted certain concerns surrounding the company's financial health. It has incurred losses in the past three fiscal years, raising concerns about its financial sustainability and profitability. It also faces challenges with negative cash flows from all three major activities, impacting working capital requirements," said Shivani Nyati, Head of Wealth at Swastika Investmart Ltd.

"While the company possesses certain strengths, its financial situation calls for a cautious approach and this stock is best avoided by new investors. Even investors who got allotments through IPO are advised to exit their holdings," she added.

As of March 31, 2023, the company said it has relationships with over 1,900 healthcare product manufacturers, giving them access to over 64,500 product stock-keeping units. It has 73 warehouses in 37 cities across 19 states and union territories, and its customer base includes over 81,400 pharmacies and 3,400 hospitals in 495 districts.

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