Q. The IPO hit the markets on February 9th. Can you briefly tell us about the business history? What is the business about?
Prabhat Agrawal: So, we are a relatively very young company. We started this company in 2018. Pre-2018, I was the CEO of Alkem Laboratories. I was a professional running in a corporate environment and I kind of turned entrepreneur with this venture. And our business model is very simple. We are one of the largest distributors of healthcare products in this country. Basically, we buy from 1900 different companies today and supply to around eighty-one-and-a-half thousand retail pharmacies and three-and-a-half thousand hospitals. We are a link between all the brands and those small mom-and-pop shops where the medicines are dispensed or hospitals where the medicines are dispensed to the patients.
Q. Whenever we talk about any IPO, the discussion is incomplete without discussing the financial performance. So, how is the latest financial performance of Entero?
A. Last financial year, we did a turnover of Rs 3300 crore with an EBITDA of around Rs 85 crore. This year, in the first six months of the year, we have done a turnover of around Rs 1900 crore with an EBITDA margin of 3% or Rs 61 crore for the first six months of the year. Our revenue has been growing quite well. Last three years, we had a compounded annual growth rate (CAGR) of 36% as compared to the industry growth rate of only 10%. And our margins have also steadily expanded over the period of time. We are extremely confident and we are very focussed that the strategies that we have deployed, scale that we have created, the company relationships that we have along with the pan-India presence and our technology usage will help us to deliver good growth and with the growth expansion of margins automatically comes.
Q. Is the company only focused on the domestic market or is the company planning to go global as well?
A. No, we are focused on the domestic market only. The domestic market is huge. It is a $33 billion industry addressable market for us, 2.7 lakh crores, and the market itself is growing 10-11% year-on-year. So, India itself presents a massive growth opportunity for us. We are relatively small in a large market like India. So, our efforts in the next few years is to capture more market share of the domestic market.
Q. Competition in the healthcare industry is quite fierce. What sets Entero Healthcare Solutions Ltd apart from its peers?
A. We are competing with small regional local distributors and the biggest differentiator is our scale. We are a pan-India company with a presence in 38 cities and through 77 warehouses we are supplying 500 districts in India. So, the biggest differentiator is our scale which gives us access to deploy technology, access to capital, access to talent, access to management, resources and others and that creates a massive right to win for a player like us.
Q. A lot of focus is there from the government to push local manufacturing also. What are your expectations from the healthcare industry in the coming three to five years?
A. We work with all kinds of manufacturers, whether large, multinational, Indian domestic players, small regional, or local players. So, we give them access to this large Indian market, any company that chooses to operate in India and launches products in India can ride onto our distribution network and make their products available to every nook and corner of the country, that is the vision of the company. We create a platform on which every small manufacturer or brand can use this platform to get India’s market access.
Q. When it comes to future prospects, what are you planning? Are there any expansion plans?
A. Yes. We are using this IPO money basically to drive organic and inorganic growth because we see massive opportunity, but our penetration levels are still low in many parts of the country. We want to expand our customer base in newer geographies. We want to get into newer product segments in healthcare. So, we see a massive opportunity and that is the reason why we are tapping public markets.
Q. What is the company planning when it comes to the IPO and what are your expectations from the IPO?
A. We had a phenomenal start to this whole IPO. You would have seen our anchor book that was released yesterday. We had some of the biggest blue-chip names like the Government of Singapore, Capital World, Premji Invest, Allianz Capital & more. These are the global best quality FIIs and they have invested and domestic as well invested in the company. So, we had a good start. Of course, the next three days will be book building. And once the proceeds are there, we will deploy this capital to drive the organic growth and inorganic growth strategies that we have mentioned.
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