 "Entero Healthcare makes weak debut; lists 5% below its issue price")
Entero Healthcare Solutions made a weak stock market debut with its shares listing at a 5 per cent discount. The stock listed at Rs 1,201 against issue price of Rs 1,258 on the BSE in Friday.
On the National Stock Exchange (NSE), the stock of the pharmacy retail company listed 2 per cent lower at Rs 1,228.70 against its issue price. The stock hit an intra-day high of Rs 1,258.
At 10:10 am; Entero Healthcare was quoting at Rs 1,208, down 3 per cent from its issue price on the BSE. A combined 770,000 shares changed hands on the NSE and BSE, until the time of this report. In comparison, the S&P BSE Sensex was up 0.45 per cent at 72,393.
The issue was subscribed just 1.53 times. QIB portion got subscribed 2.28 times and the retail investors' portion was subscribed 1.33 times.
Non-Institutional Investors (HNIs) didn’t show much interest as their portion was subscribed just 22 per cent, data shows.
Entero Healthcare Solutions is amongst the top three healthcare products distributors in India in terms of revenue in FY22.
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The company facilitates healthcare product manufacturers by providing access to pharmacies, hospitals, and clinics through its integrated and technology-driven distribution platform.
Similarly, clients (pharmacies, hospitals, and clinics) gain access to a broad range of healthcare products through the distribution infrastructure and established relationships with healthcare product manufacturers.
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, as per analysts.
"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.
The losses in the past three financial years were due to a write-off of its scaled-down ancillary business and the need to maintain a huge inventory.
The company recently has been on an acquisition spree. The result of these acquisitions as well as the synergies built from them remain uncertain and, hence, a risk, as per analysts.
Since inception, the company acquired 34 entities in the healthcare products distribution industry, Capital Market said in an IPO note.
The company has experienced negative cash flows from operating, investing and financing activities in the past and may continue to do so in the future.
"The company may incur losses and reputation may be adversely affected by the return of the products by customers, arising from the distribution of expired, unsafe, defective, ineffective or counterfeit products, and product spoilage, breakage and damage during transportation or in storage. The company may also be subject to product liability claims", SBI Securities said in IPO note.