Entero Healthcare Solutions witnessed a negative debut on the exchanges on Friday, falling short of pre-listing expectations. Analysts said the underwhelming listing highlights concerns surrounding the company’s financial health.

Entero 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.

“While Entero 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,” said Shivani Nyati, Head of Wealth, Swastika Investmart.

Also Read | Entero Healthcare Solutions shares list at 2% discount to IPO price

The company intends to use the proceeds towards repayment of debt, long-term working capital requirements, funding subsidiaries, and pursuing inorganic growth initiatives through acquisitions as well as for general corporate purposes.

Entero Healthcare Solutions helps healthcare product manufacturers by providing them with reach and accessibility to pharmacies, hospitals and clinics. As of March 2023, the company has 73 warehouses located across the country.The company adds value to the healthcare product manufacturers that it works with by providing services through its integrated and technology-driven, pan-India healthcare products distribution platform.Further, as of FY23, it has supply relationships with over 1,900 healthcare product manufacturers which gives them access to over 64,500 product SKUs.

The target addressable market for pharmaceutical distributors in India is valued at Rs 2.7 lakh crore in the fiscal year 2023 and is expected to grow at 10-11% CAGR from FY23-28.

During FY23, revenue from operations increased 31% year-on-year to Rs 3300 crore and losses narrowed to Rs 11.1 crore from Rs 29.4 crore a year earlier.

ICICI Securities, Dam Capital Advisors, Jefferies India, JM Financial and SBI Capital Markets acted as the book-running lead managers for the IPO.

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