Entero Healthcare Solutions Ltd (NSE: ENTERO) Q1 2026 Earnings Call dated Aug. 11, 2025
Corporate Participants:
Unidentified Speaker
Prabhat Agrawal — Managing Director and Chief Executive Officer
Balakrishnan Natesan Kaushik — Group Chief Financial Officer.
Analysts:
Unidentified Participant
Rahul Dani — Analyst
Chintan Sheth — Analyst
Bhargav — Analyst
Ishmohit Arora — Analyst
Sudarshan Padmanabhan — Analyst
Sajal Kapoor — Analyst
Akshat Mehta — Analyst
Prince — Analyst
Shivkumar Prajapati — Analyst
Divya Agarwal — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Q1FY26 earnings conference call of Antero Healthcare Solutions Limited hosted by Monarch Net Worth Capital Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touch tone phone. Please note that this conference is being recorded. Please note this conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as on the date of this call.
These statements are not the guarantees of future performance and involve risk and uncertainties that are difficult to predict. I now hand the conference over to Mr. Rahul Dhani from Munark Net Worth Capital. Thank you. And over to you.
Rahul Dani — Analyst
Yeah, thank you. Hi, Good evening everyone. Very Warm welcome to Entero Healthcare Solutions Q1FY26 earnings call. On the call today we have with us Mr. Prabhat Agarwal, Managing Director and CEO. And we have Mr. Bharat Krishna Kaushik Group CF of the Group CFO. I will hand over the call to the management for the opening remarks and then we’ll move to Q and A. Thank you. And over to you sir.
Prabhat Agrawal — Managing Director and Chief Executive Officer
Yeah, thank you. Good evening everyone and thank you for joining our earnings conference call to discuss the operational and financial performance for Q1FY26. My name is Prabhat and on this call I am joined by Mr. Balak Kaushik Group CFO and SGA, our investor relations advisors. I hope everyone had an opportunity to go through the financial results and investor presentation which has been uploaded on the stock exchange and also on our company’s website. We have started the new financial year on a strong note with Q1 revenues growing 28% year on year as against the IPM growth of 9% to rupees 1404 crores.
On like to like basis the revenue growth is 31%. 3% growth is adjusted after change in revenue recognition for a certain contract on net margin basis. More importantly, this growth is broad based supported both by organic expansion contributing 15% on like to like basis where we continue to deliver around 1.6 times the market growth rate and the rest through MA executed in last financial year. We have already announced more than 400 crores of acquisitions in the last conference call, some of which have already closed in the current quarter and the balance also will be closed in the quarter two itself.
Prabhat Agrawal — Managing Director and Chief Executive Officer
At the same time there are more deals in pipeline which will be announced once the transaction documents are signed. Acquisitions will remain an important lever for growth, but our approach will continue to be disciplined and value accretive. Gross profit came in at rupees 140 crores up 40% year on year with our gross margins improving by 83 basis points to 9.9% versus last year and 17 basis points versus last quarter. This improvement has been driven by higher value added services, margin accretive categories and procurement efficiencies. EBITDA for the quarter was Rupees 50 crores representing a growth of 66% year on year with margins improving by 82 basis points versus last year to 3.6%.
Profit after tax increased 47% year on year to Rs 30 crores in spite of higher gross margins versus last quarter. The EBITDA margins declined from 3.7% to 3.6% versus last quarter as the operating leverage impact was not felt in this quarter due to annual salary and wage increases being implemented at the beginning of the year, our revenue base increased by 5% versus last quarter while operating cost increased by 9% over last quarter. Now the fixed manpower costs have been fully baked in the quarterly operating cost numbers and as the revenue growth catches up in rest of the year, the positive impact of operating leverage will start playing out event IPM revenue grows significantly from quarter two onwards and after the raisy season.
This is in line with our historical quarterly performance and even our full year guidance of 4% plus EBITDA margins has factored this in the projections. Equally important is our continued focus on cash flows. We have moderated our net working capital from about 71 days about a year ago to around 66 days in last couple of quarters. We have initiated multiple initiatives to further optimize both inventory and receivables through ERP driven controls and data science based techniques and we are targeting another 10% reduction in working capital days by end of this financial year. Our network and reach have strengthened further.
Prabhat Agrawal — Managing Director and Chief Executive Officer
We now serve over 71,000 retail pharmacies and more than 2,500 hospitals across 469 districts in India supported by 102 warehouses strategically located across the country. Our product portfolio has expanded to over 74,700 SKUs sourced from more than 2,600 healthcare product manufacturers. This scale is not just about numbers, it is about reach, vast product portfolio, service reliability and quality which helps us to continuously gain confidence and wallet share from our customers. More and more customers, including even organized retailers find our value proposition compelling and unique. At the same time, as we penetrate larger parts of India with significant share in micro markets, we becoming significantly more attractive for any healthcare product manufacturer to collaborate or partner with us both for demand fulfillment and demand generation activities.
Our strategic playbook centered on discipline in organic rows, organic scale up in underserved markets and deepening partnerships with healthcare brands continues to deliver and bring us closer to our long term vision of building India’s most comprehensive, efficient and digitally integrated healthcare distribution platform. We are executing on three clear growth pillars. First, organic expansion, deepening penetration in our existing markets, winning a larger wallet share from existing customers and expanding our product range especially into higher margin categories like medical devices, diagnostics, surgical consumables, trade, generics and specialty pharma. Second, discipline in organic growth. We are very selective with acquisitions.
Now we only acquire where there is a strong strategic fit, whether it’s a new geography, a differentiated product segment or a capability that strengthens our value proposition. Third, operational excellence. This means better procurement, technology driven, efficient warehousing and delivery infrastructure and optimized operating cost and working capital management. It is worth reiterating that the Indian Pharma distribution market is still highly fragmented with organized players accounting for less than 10% of the market. Our Pan India technology led and category neutral platform is difficult to replicate. This positions us uniquely to capture outside share gains as the market consolidates.
Prabhat Agrawal — Managing Director and Chief Executive Officer
Looking ahead, we are on track to deliver 30% revenue growth in FY26 including both organic and inorganic growth, surpassing 4% full year EBITDA margins and generating positive operating cash flows. Margin expansion will be driven by richer product mix, procurement gains, value added services and operating leverage from scale. We are targeting to achieve the working capital target of 60 days by end of this financial year. In summary quarter one FY26 has been a strong start to the year. We continue to deliver on the vast consolidation opportunity in an extremely fragmented healthcare supply chain through organic expansion as well as disciplined M and A.
We continue to add customers, enhance product portfolio through collaboration with healthcare brands, diversify into new product categories such as medical devices, diagnostic trade, genetics, etc. To become a one stop solution for our customers. With this I close my opening remarks and invite people to ask questions.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session Anyone who wishes to ask a question may press star and one on the test drone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. The first question is from the line of Chintan Sheth from Girig Capital. Please go ahead.
Chintan Sheth
Hi, thank you team for the opportunity and congressman, her improvement in gross margins and EBITDA margins. A couple of questions on the growth part. You did mention that 31% is a like to like growth with 3% is related to revenue recognition impact. But if I look at organic growth of 15% and adjust and calculate the inorganic contribution for the quarter it seems sequentially, you know, declining. Last quarter I think you mentioned around 200 to 225 crore was the contribution from the inorganic revenue. What would be that number and why is if the number has lowered down, why.
Chintan Sheth
Would you respond to this breakup into organic and inorganic?
Balakrishnan Natesan Kaushik
So Chintan, this is Bala here.
Chintan Sheth
Hi Bala. Hi.
Balakrishnan Natesan Kaushik
So if you look at the growth, the 225 that you mentioned for last quarter that number was about 218 and this quarter that’s about 230 crores. So there is a growth when you look at organic inorganic for entities that were acquired during the quarter one of FY25 the portion that was there in the reported numbers will move into organic. So if you look at like to like it’s about 230 versus 218 of last year. Oh on the numbers as well.
Chintan Sheth
Okay, got it. And in terms of equation pipeline if you can, you know we still, you know keeping Track on the 802,000 odd crore of revenue equation for the year or any change on that number if you, if you want to highlight.
Balakrishnan Natesan Kaushik
Yeah. So you know if you look at the guidance that we gave on this year of revenue growth of 30% that includes both organic and inorganic part. Right. So inorganic part we had assumed around 500 crores of recognized revenue or books. So which is what we are on track. We have already you know done 400 crores in quarter one we announced which will be you know start reflecting from quarter two onwards and there are further more acquisitions in pipeline that will be completed.
Chintan Sheth
Got it. I’ll jump back in. Thank you for the opportunity.
operator
Thank you. The next question is from the line of Bhargav from Ambit Asset Management. Please go ahead.
Bhargav
Good evening Tim. And thank you for the opportunity. Sir, in your press release you mentioned that earlier the guidance was to do acquisition by August, but that has been pushed over to November. If you can share some reasons for the same. That’s my first question.
Unidentified Speaker
We approached to November anything so in the stock exchange because we had given August 15. So just because it is going towards the end of August, we put it as for the water, for the one that we announced, the quarter that we announced, the two, all, all these acquisitions that we have announced in, in previous conference call that will be completed during this quarter, two of them we have already completed, you know, one of them we are just waiting for dung license to conclude.
Bhargav
Okay, so what you are hinting at is that in the second quarter couple of acquisitions will be announced.
Unidentified Speaker
Not announced, completed the one that we announced previously.
Bhargav
Yeah. So your revenue recognition will start happening.
Unidentified Speaker
Yes, yes. From quarter two. Yeah.
Bhargav
Okay. And what would be the size of them in terms of revenue from the second quarter?
Unidentified Speaker
It depends, you know, on the day when we are able to close, as I told you, couple of them we have already closed. Right. So some of them the revenue is flowing from July beginning. One of them is going to flow from July end. One of them, you know, we are just, everything is complete. We are just waiting for the new drug license in the new company. You know, the, the drug license site is down for 10 days now, so we are not able to close that transaction. The moment the site is open within three, four days, we should close the transaction and the revenue will start flowing in.
So it is difficult to accurately predict some of this. We are dependent on external factors. But what I can tell you that all four transactions will be definitely closed. Two of them has already closed. Balance two will also be closed.
Unidentified Participant
Okay. Secondly, sir, is it fair to say that 1Q is seasonally the weakest quarter for us and if we have done 66 days of working capital in 1Q, it is fair to say that the working capital from year on only should improve, given that the revenue growth in terms of absolute also will be higher in the subsequent quarter.
Unidentified Speaker
Yes. Because, you know, typically, if you look at even the pharma industry, how the revenues are split into four, you know, four quarters, you will see that quarter two is generally 8 to 10% higher than quarter one. You know, quarter two is the strongest quarter in the pharma industry. Right. Because of the rainy season, which, you know, because of which the spread of infectious diseases. So typically and historically also even in our numbers, you will see that at quarter dos, there is generally 10, 12%, you know, higher than quarter one. So on A, on a high quarter Basis on a high quarter numbers, your NWC in days goes down because the NWC doesn’t increase in the same proportion.
So you are right, you know these numbers will improve in quarters to come.
Unidentified Participant
And lastly sir, Amazon India has significantly expanded its recent selling medicines. So now they are servicing in almost all of their serviceable sinkholes. So do we benefit out of this? And how big can this business become? And related to that, Zepto has also launched pharmacy in August in four major metros. So if you can combine both of these in the same answer, that would be very helpful.
Unidentified Speaker
See you know, quick commerce foray into pharma or healthcare I’m not too sure about, you know, how this is going to scale up and how this is going to impact because there are a lot of challenges in quick commerce, especially on the pharma category. And the challenges are basically three. Number one is the range. Because if the quick commerce value proposition is delivery in 10 minutes only, then there are a few medicines that they can deliver in 10 minutes. But if their value proposition is going to be fulfilling the prescription then they won’t be able to do that.
Because you know the pharma, the number of SKUs is just humongous, right? So you know, there are so many brands, even we are carrying 75,000 SKUs. The whole market is carrying more than 150,000 SKUs, right? So if your value proposition is going to be fulfilling the prescription and there are four or five drugs written in the prescription, it will be very difficult for them to fulfill all 4, 5. Even the large organized E pharmacies are not able to do it. Right? So that will be number one challenge. Number two challenge will be on AOVA, you know, so you know how to drive AOV on this because you know in 10 minutes, as I said, that whole range will not be available with you.
So your AOV could be much, much lower. On a lower AOV you will burn a lot of money, okay? Because your delivery cost and other cost will be a very high proportion of your sales. Third is the prescription, you know, because the prescription, if you don’t have a prescription then you know it. You have to generate prescription through doctor calling that adds lot of cost to the system. So on a low aov, you know, prescription generation is required then that will eat up lot of margins. Thirdly, fourthly, you know, in terms of if you want to go up because of this prescription addition, your 10 minute thing may not work out.
So it will take much longer time for you to supply the medicine and but you won’t be able to combine pharma delivery with other delivery because if you want to combine both, pharma will take more time because of prescription and because of that other things will also get delayed. So typically what is happening is they are delivering pharma separately and other sku separately from the same basket. So which adds significant additional cost because on the same order you will have two deliveries. So because of all these challenges, I’m not too sure you know how much, you know, pharma will be profitable for quickcom companies.
But you know, they are experimenting. Let’s see how it works out.
Unidentified Participant
And Amazon and Amazon, Amazon has a.
Unidentified Speaker
Better opportunity than other people because Amazon is not on quick commerce. Amazon is trying to fulfill the whole prescription range. Right. Which is you don’t find anywhere you find on Amazon. So the value proposition of Amazon is, is selection, not the speed.
Unidentified Participant
Yes. So are we participating in that opportunity?
Unidentified Speaker
Yes. We supply to organized detailers. Yes.
Unidentified Participant
Okay, great, Great sir, thank you very much and all the very best.
Unidentified Speaker
Thank you.
operator
Thank you. The next question is from the line of Ishmohit Arora from SOIC Research. Please go ahead.
Ishmohit Arora
Hi sir, I had a question that for the full financial year do we maintain that we’ll grow our top line by 30% because sequentially our growth has been lower for the last three quarters in a row now.
Unidentified Speaker
Sorry, what?
Ishmohit Arora
For the full financial year do we maintain a 30% plus top line growth guidance? Because sequentially for the last three quarters our growth has been a bit slower.
Unidentified Speaker
So see if you look at last whole financial year, FY 25 hour growth rate was more than 30%. Right. So when we said that, you know, similar growth rate will continue in this year.
Ishmohit Arora
Right.
Unidentified Speaker
Basis our growth rate was 31%.
Unidentified Speaker
Right. Because I think beginning from the, I think this quarter our base is pretty elevated when it comes to basically top income margin versus last year.
Unidentified Speaker
Yeah. So the, you know, the base of quarter two is higher and that’s always has been, you know, if you look at many years, you know, for last few years, always quarter two is much higher than quarter one. So of course you know, the, our quarter two numbers have to be significantly better than quarter one to even deliver that kind of a growth over a quarter two base.
Ishmohit Arora
Right, Right. And so the second question was that I think in first half of this financial year or for the full financial year, I think last phone call you alluded to that in H2 you have seen positive cash flows. Do we expect a similar trend to continue at H1 will have positive cash flows or for the full financial year we will maintain that we’ll see positive cash flows.
Unidentified Speaker
We have said that, you know, for on a full year basis we will be positive cash flow.
Ishmohit Arora
Right.
Unidentified Speaker
And similarly for EBITDA margin, also we have said that on a full year basis we will be 4% plus.
Ishmohit Arora
Right. Sure, sir. All the best for the coming.
operator
Thank you. The next question is from the line of Sudarshan Padmanabhan from Ask Wealth Advisors. Please go ahead.
Sudarshan Padmanabhan
Yeah, thank you for taking my question. So my question is, you know, if I want to understand a little bit more on the operations, say in the last few quarters and even if I look at the post fourth quarter, which is the first quarter, the number of district covered had basically come down from 500 to 469. And similarly, you know, the number of retailers, the number of SKUs as well as the number of manufacturers. So I mean anything that, you know, you can add in this or are we primarily looking to basically scale down, you know, and focus more on operational.
Unidentified Speaker
Just one second. I’m just trying to pull out the earlier quarters, this thing. Just give me a moment. Yeah, so you know, if you look at issue sequentially, also if you look at quarter, my quarter four had 69,000 customers. Quarter one has 71,000 customers. Right. So it has not gone down.
Unidentified Participant
Okay. Okay. So I mean I was referring to that SKUs and the number of district covered, etc. That’s the page number six. Page number. Yeah.
Unidentified Speaker
So if you look at, you know, in quarter to quarter, I mean comparing exactly with the same quarter last year for district covered in FY26 was 469. Last year it was 448.
Sudarshan Padmanabhan
Okay, so there is a seasonality is what you’re saying. I mean even this data that you are providing, I mean on a quarter, on quarter.
Unidentified Speaker
I’m not able to understand how you’re figuring out seasonality. Which data point are you.
Sudarshan Padmanabhan
So I am looking at the data point, you know, where, you know, the number of SKUs handled, you know, in FY25, you know, is basically 80,600. The number of retail, you know, retailers is 95,300. And when I come into the first quarter.
Unidentified Speaker
With a quarter, okay, if you look at just quarterly numbers, you know, because sometimes what happens is that that same little may not have built in every quarter. So it will get captured in the full year, but it may not get captured in that particular quarter in which we are not building. Right. So you look at quarter to quarter. So if I look at last year, quarter one, FY25. We had 60,000 customers in, in quarter one of this year. We have 71,000 customers. That’s the more like to like comparison.
Sudarshan Padmanabhan
Sure, sure, sure. And with respect to, you know, understanding the cost, I think one year on a year, on year basis and I see there has been a stark improvement in the gross margin and for the reason that you had explained that there has been a salary hike. But is it fair to understand going forward you’re talking about, you know, over 30% growth, the rate of change of the salary cost would incrementally start coming down and incrementally that will start flowing to your. So that is probably something that we should expect from the next three quarters.
Unidentified Speaker
Yes. You know, it’s a simple math. You know, for example, you know, we had an operating cost of something like 89 crores in this quarter. Right. So all the salary increases have already been baked in quarter one. Okay. And my growth is close to 10, 11%. Sorry, 9% operating cost. Right. My revenue growth target is 30% for the full year. Right. But on a quarter, on quarter basis, my revenue growth is only 5%. So this 5% will, you know, expand to 30%. But my entire cost increase has already been baked in quarter one.
Unidentified Speaker
Sure. And if I just go through that probably will exit your fourth quarter. If I just extrapolate this by about four, anywhere between four to four and a half, this is where for the full year you will basically end up. 3/4 has to be between that.
Unidentified Speaker
And, you know, with respect to, you know, the acquisition, I think, you know, as you had, you know, talked earlier, that there is going to be part growth, you know, from, you know, your acquisition and partly from your, you know, existing business. Just to understand from a longer term perspective, as the pace catches up, you know, what is your thought process with respect to, you know, the rate of change of acquisition that, you know, has been very healthy till now.
Unidentified Speaker
So rate of acquisition will go down in future, you know, in next two, three years the rate of acquisition will go down because we will not need so many. I mean we would have penetrated a good part of India. We would have expanded into various product segments. So the need, the inorganic need will go down. Right. So today the inorganic is contributing almost 15, 16% on our growth. Right. So in future this 15, 16% growth will taper down. The organic growth will continue.
Sudarshan Padmanabhan
Perfect. But the cash flows will be more robust. Right. Because in that case, your acquisition, you know, the capex that goes into it, that will not be required. So to that extent, your cash generation ability Will increase substantially.
Unidentified Speaker
So idea is that, you know, we should be, you know, cash flow positive on the operating cash flow. So whatever operating cash flows we generate, you know, that would give us the ability to acquire more in future. As of now, we are using IPO funds to do that.
Sudarshan Padmanabhan
Perfect. And I mean, just one final question before I join back. What would be the, you know, OCF in the last, you know, second half of last year and first quarter of this year? Just some color on that.
Unidentified Speaker
It was positive. Last, last six months was good, good, positive. But as I told you, you know, we are working on multiple projects on, you know, on working capital reduction. And you know, among all the levers, that’s the lower hanging lever for us because, you know, we can, at this scale, we can definitely optimize much more on working capital today, 66 days and you know, earlier we had given a target of, you know, getting 10% reduction or 60 days in two years. Now we are saying that by end of this financial year we should be able to reach there.
Sudarshan Padmanabhan
Sure, sure. Thanks a lot. I joined back with you.
operator
Thank you. The next question is from the line of Sajal Kapoor from Anti Fragile Thinking. Please go ahead.
Sajal Kapoor
Yeah, thanks for taking the questions. First question is, has Antigua’s approach to integrating acquisitions fundamentally evolved between let’s say 2018-19 versus last 12 months?
Unidentified Speaker
Yes, definitely. We have been learning from, from our experience over the last four, five years.
Sajal Kapoor
Would you be able to share one or two examples of that learning, please?
Unidentified Speaker
No. Now earlier, you know, we were, you know, taking a much slower approach in integrating. Now we are taking a more aggressive approach in integrating. So, you know, from. Maybe we change the RP systems or technology systems. From day one earlier we were waiting a much longer time to, you know, change those things because we wanted the existing sellers to. We didn’t want to disrupt the business so much and we wanted a slower integration. Now we are much, much ahead in that our selection criteria has changed quite a bit now versus earlier. Now we are not looking at very small scale acquisitions.
We are looking at the targets from multiple angles as compared to how we used to look at it in the first two years of our existence. And that’s why you would see that most of the acquisitions that we have done over last 12 months have all been margin accretive.
Sajal Kapoor
Yeah, sure. And just to follow up, I mean, how do you motivate your team and maintain, you know, a productive company culture amid this rapid, organic and inorganic expansion?
Unidentified Speaker
This team has been around for a long time. You know, most of the Senior members of the, of this team have been around for last six years. You know, they know, they have, we have grown together as you know, as a team. They have various kind of, you know, reward mechanisms in place including ESOPs and all that. So you know, this is an exciting business. Where would you find so many businesses where we like 30% year on year with you know, you know, 10 acquisitions in a year being done. So it’s a great learning experience also for a lot of people.
Sajal Kapoor
Sure it is, yeah. And lastly, what is the investment roadmap for your proprietary technology platform over the let’s say next one to three years?
Unidentified Speaker
We have already built lot of technology. You know, to be honest, we have, we are one of the few companies that have developed our own ERP systems, you know, which can be customized, which can be integrated with Facebook, can be integrated WhatsApp, it can be integrated with any other social media platform. So all these, we have built our own apps, customer facing apps. We are also working on a health tech platform where we should be able to integrate directly with the retailer systems. So all these tech investments have been made in the past. We don’t see much significant investments in tech going forward.
It’s already in place. It just needs to be, you know, utilize more or capitalize more.
Sajal Kapoor
So, so, so, so that means that as we start monetizing the detect, so investments have been made. It’s all upfront pain that we have already endured. So the benefits should start flowing in incrementally as we go into this fiscal, later off of this fiscal and maybe next one. Yeah.
Unidentified Speaker
For example if I’m saying that you know, targeting 10% reduction in working capital days, that will play a very strong role in that. You know, without that tech we wouldn’t have been able to do it or we would be able to do it.
Sajal Kapoor
Absolutely, absolutely. That’s very helpful. Thank you so much. All the very best.
operator
Thank you. The next question is from the line of Akshat Mehta from Seven Rivers Holding. Please go ahead.
Akshat Mehta
Hello sir, am I audible?
Unidentified Speaker
Yes.
Akshat Mehta
One question on the revenue part itself. Sir, you said that around 230 crores of acquisition is what is included in the current quarter. You know, how should we then look at the 15? That implies that you know, around 7% growth is the organic. So how should we look at that and the 15 number? I mean if you can just help me make sense of the revenue growth figures.
Unidentified Speaker
So I think Balay, you give you different. We said 180 crores is included in organic. Right. So Akshay so the way it is. So there were certain acquisitions that were done in Q1 FY25 and certain revenue numbers were reported out of it into our financials of Q1FY25. And some of it, which is the pre acquisition revenue, whatever was that value goes into the inorganic and whatever is excess over what we have already reported in the previous year goes into organic. So you will have to look at those numbers in an overall basis. If you try to split between what went into organic, inorganic.
That’s probably why you are getting a different number in your calculation.
Akshat Mehta
Yeah. Just to confirm, you mean to say that you know some part of the acquisition revenue that has come in this quarter. Quarter one, some part of that was also there in quarter one, FY25.
Unidentified Speaker
Exactly. Exactly. Yes.
Unidentified Speaker
Okay. Secondly, I wanted to ask if, if we exclude the amount of annual increment that was given to the employees this quarter, what would be the basis point impact on our margins? You know, from 3.6 it would have. Been 20 basis points. 20 basis points. Okay. Yeah. And you know the acquisition that was done last year in FY25, around 500 crores that we booked, you know, what kind of growth that we’ll see on these acquisitions, you know, in, in this year. Similar age what we are talking about, you know, 15 plus. 15% plus for the year. Thirdly, sir, if you can help us understand, you know this, this tax rate for this quarter was Quite low at 17. How should we look at this for the full year as well? So Akshat, tax rates for the full year will also be in the similar range because we are taking some tax efficiency measures which is actually helping us improve our tax. So the annual numbers will also be somewhat in the similar range of 17, 18%.
Unidentified Speaker
Okay sir. And this employee cost number that is gotten for the year, 58 crores, you know, some 2, 3% quarter on quarter upside on, that is what we can take as the number for the full year. Right.
Unidentified Speaker
You can, you know, part of the manpower cost is fixed. You know, a certain part is also variable which is mostly sales, commission and all that. You know, so that will change in proportion to sales. But the rest of the cost will remain fixed.
Akshat Mehta
Okay. But we can roughly take, you know, multiplied by four and you know, put some upside to that as the full year number.
Unidentified Speaker
Yes, yes.
Akshat Mehta
Okay. And just one confirmation, sir. You said that we are targeting 500 crores of acquisition this year.
Unidentified Speaker
Yes.
Akshat Mehta
Okay. Thank you sir. I’ll come back.
operator
Thank you. The next question is from the line of Prince from Pink Wealth. Please go ahead.
Prince
Hello. Yeah, yeah, hi sir. Thank you for taking my question. So the first question is in this quarter there is no growth in our hospital customers. So if you can throw some light on it. I mean we already at almost what, 3,000 plus hospital customers, right? 2500 plus.
Unidentified Speaker
Yeah, so. So there were no addition in the hospital customers. It was similar to the last quarter.
Unidentified Speaker
See at end of the day, you know, you know we are getting more wallet share from, from the same hospitals. Even a lot of hospitals are getting consolidated also. Right. So it’s like, you know, you know, they are becoming part of one group. So it’s getting reported as, you know, one single customer.
Unidentified Speaker
Okay. So if you can share the increase incremental wallet share from these hospitals as well as those, you know, distributors.
Unidentified Speaker
So we are not giving, you know, kind of revenue split between hospitals and you know, what do you call in hospitals and pharmacies? It’s sometimes very difficult to get the data out also because lot of, you know, hospitals have OPD pharmacies, IPD pharmacies. Sometimes the OPD pharmacies are outsourced to third party get counted as retail pharmacy, while actually it should be counted as, you know, you know, pharmacy inside a hospital. So you know, the data classification is not very, very, you know, accurate I would say in hospitals.
Unidentified Speaker
Right. So no, in terms of wallet share, incremental wallet share, not the revenue split between the hospitals and retailers.
Prince
So how will you calculate the wallet share? The wallet share you will calculate by dividing the revenue by number of customers.
Unidentified Speaker
Right. And compare it over a period of time. Isn’t it because what you’re going to get an aggregate wallet share or let’s say average wallet share, you won’t get hospital by wallet share. So in some hospitals you might have 30 volunteer, in some hospital you might have 10 volunteer. So what you would get is an average wallet share. Not even wallet share you will get because you will not know what is the total purchase of that hospital.
You will only get a revenue per hospital.
Prince
Yeah. And also in terms of acquisitions, currently we have four in pipeline. So other than this four, you know, acquisitions pipeline, what opportunities do we see for merger and acquisitions?
Unidentified Speaker
So we are, you know, continue, we are evaluating couple of more deals. Hopefully, you know, in next one month we should be announcing that the work is going on as we speak. Okay. And for this quarter, you know, ebitda margin was 3.6% and we have target for about 26 like 4% plus. So. So yeah, so apart from operating leverage, what efficiency and yeah, like you know, procurement efficiency as well as other metrics, product mix like they are how, how they will contribute for this, for this financial year.
Unidentified Speaker
So this year what we have said is 4% plus EBITDA margin. Right. And you know at today quarter one the gross margins are at 9.9%. Right. So for the rest, for the incremental EBITDA, large part of it will flow through operating leverage only because all the costs are there while you know revenue is only 5% baked in in the quarter 1. So large part of it will come through operating leverage itself. Whatever incremental we get on gross margin will be an additional over and above our targets.
Prince
Okay, so understood. And just for the last part like what was the contribution from medical devices for this quarter?
Unidentified Speaker
Medical devices around 4, 5%.
Prince
Okay, 4, 5%. Yeah. So and how do you look at for the going forward for this year?
Unidentified Speaker
So we are more aggressive on medical devices now. You know it’s growing. Well it has a higher margin structure. Also couple of deals that we are evaluating are in this space itself. So this shell will grow.
Prince
Okay. Yeah. Thanks for answering all the questions.
operator
Thank you. The next question is from the line of Shivkumar Prajapati from Ambit Investment Advisors. Please go ahead.
Shivkumar Prajapati
Yeah, hi sir, thanks for asking my question. So my first question is I noticed that there are two steps, step down subsidies in our, you know, a list of subsidies. So just want to understand why we are you know looking at this route and not subsidy route. Second one is like we have, we had very low X rate for this quarter. So what is the reason behind it?
Unidentified Speaker
Sorry, I didn’t get your question. Very well.
Unidentified Speaker
So sir, in our list of subsidies we have two step down subsidiaries. So usually to we take like we acquire the companies as a subsidiary and not rooted through a step down subsidiary. So just want to understand what change does this makes us.
Shivkumar Prajapati
Yeah. So when you’re referring to step down subsidiaries, can you tell me which ones you are referring to as step down?
Unidentified Speaker
Okay, just give me a minute, I’ll just open.
Unidentified Speaker
I think you’re referring to CPD Pharma and Chetna Pharma Distributors if I’m not wrong. Because basically we are looking to merge a few entities to look at it from a operational efficiency. We are doing an operational pilot on if we merge the entities, how does it work, whether it helps us improve our overall operations and stuff. So there are two subsidiaries which we are merging with one of our existing subsidiaries. So in this quarter the shares of those subsidiaries were sold from Enteroc to another subsidiary of Entero and we will be merging those subsidiaries. That’s the reason you’re seeing a step down subsidiary? Yes.
Shivkumar Prajapati
So that is the reason you are seeing step down. Otherwise typically acquisition all our acquisitions happen as a direct subsidiary of Entero.
Shivkumar Prajapati
Okay, got it. Great.
Unidentified Speaker
Question on the taxation. We are also working on certain tax efficient way of funding our subsidiaries which will help us to improve our overall effective tax rate. The reason being that we will be able to utilize the earlier tax losses and set off our overall tax. That’s the reason you are seeing a lower effective tax rate. And we believe our tax rate for the full year will be in the same range.
Unidentified Speaker
Okay, so 16%, like 1618. Is what it we expect it to be for the full year as well for FY26.
Shivkumar Prajapati
All right. And so my next question is on the gross margin. I mean in from last quarter we have been adjusting 3% of gross margin due to change in contract. And just want to confirm whether this is for a single client only and do we expect any such changes in coming, coming period?
Unidentified Speaker
This is for a single client only to answer a specific question. And so far we do not anticipate any, any, any other major impact as it stands today. We don’t anticipate any other major impact of the same nature currently.
Unidentified Participant
How the, how does this change, you know, helps the other entity or like obviously because, because of this change our consolidated growth rate, you know, looks like a bit down. But how does this change helps the other entity that we made? The change in contract?
Unidentified Speaker
No, it was not a, you know, change that was driven by us. It was more driven by the client. Right. So you know, you know there are various kind of services that you can provide. Either it’s a full recognition revenue which will impact full revenue recognition or we say that we just provide you the services. We’ll bill you for the services and not you don’t have to buy and sell from our books. So, so this is what they wanted. So this is what we did. We don’t see any other contract right now existing contract that can go through this route.
Shivkumar Prajapati
Okay, great. And so my last question is did we do any kind of assessments? I mean benchmarking with the global distribut a cost acquisition, customer acquisition cost or you know, cost to serve per order. If you, if you would provide this data points that would be helpful.
Unidentified Speaker
See, although if we compare, you know with us, the market is completely different. If we compare with uh, you know, Europe, the market will be very different. Every country is very unique. India is, I’m Telling you, in pharma itself is such a unique country, you know, in which country you have like, you know, branded generic, such a big proportion of pharma industry, right? Either it’s a, you know, most of the geography, either it’s research molecule or patented molecules and then you have generics. India has three category four category, you know, patented, then branded generic, then trade generic and then generic generic.
No country has a structure like India. You know, no country has, you know, the complexity of the geography that we have, you know, from such a huge entire US is not more than 80, 90,000, you know, pharmacies we have, we have a customer base which is larger than the total, you know, population of pharmacies in US. So it must be a good idea to benchmark with them. We’ll have to create our own benchmarks and measure against our own benchmarks.
Shivkumar Prajapati
Understood, sir. Thank you so much sir, and best of luck.
operator
Thank you. The next question is from the line of Ish Mohit Arora from SOIC Research. Please go ahead.
Ishmohit Arora
Hi sir, just a follow up question. Are we seeing any, like, do we have any view on the market creation of weight loss drugs in India and are we seeing any impact on our revenues also?
Unidentified Speaker
We are not able to hear you clearly. Can you please repeat your question and be little slow.
Ishmohit Arora
Hi sir, am I audible better?
Unidentified Speaker
Yeah.
Ishmohit Arora
I was asking are we seeing any market creation happening in the weight loss drugs in India and is our like, do we see any positive impact from growth from there also?
Unidentified Speaker
Yeah. So you know, there are two weight loss drug, weight loss drugs launched, you know, recently, which is one is Mounjaro and the second is Vigovi. So. And we are distributors for both these companies. You know, in fact, you know we are doing significant sales for LI DD in India.
Unidentified Speaker
Right. That’s it. Any idea on how the, how do you see the market evolving in India itself over the next couple of years?
Unidentified Speaker
I think next year in FY26, next calendar year you will have a lot of generic companies coming in semicolonized market. Right. So that should expand the market significantly.
Ishmohit Arora
Right. That is for my side. Thank you.
operator
Thank you. The next question is from the line of Akshat Mehta from Seven Rivers Holding. Please go ahead.
Akshat Mehta
Yes. Just wanted to ask if you can share the cash balance on the books right now.
Unidentified Speaker
Yeah, so we have about 365 crores of cash on our books currently. You will not see it all in one place. So it will be in different line items because the way the investments are done, we have about 365 crores.
Akshat Mehta
Okay, thank you.
operator
Thank you. The next question is from the line of Divya Grewal from Ficom family office. Please go ahead.
Divya Agarwal
Yeah, hi. So thanks for taking my question and I’m new to the company, so my apologies if there are some basic questions on that. So firstly, if you look at this quarter, so our inorganic growth was around 13% compared to 18 in the previous quarter. So what were the key factors driving this reduction?
Unidentified Speaker
Sorry, no. Our growth rate on organic growth this year was this quarter is higher than the previous quarter.
Divya Agarwal
Okay. Because in the PPT, if you see the consolidated growth was around 28% and enter organic growth of 15%. So the balance would be inorganic growth, right?
Unidentified Speaker
Inorganic, yes. Correct.
Divya Agarwal
So that’s 15, 13%.
Unidentified Speaker
So yes. Divi, I’ll tell you here what is happening is you are looking at 28%. The, the like to like growth is 31%. And out of 31%, 15% is organic and 16% is inorganic. After adjusting that 3%.
Unidentified Speaker
Yeah, after adjusting that 3%. Because you need to look at like to like. If you look at slide number six of our investor presentation, you will see the breakup between organic inorganic on slide 6, quarter and quarterly.
Divya Agarwal
Yeah, sir. So got your point. And secondly, on the equation side, so considering that our primary objective, acquiring smaller distributors is to expand geographic presence and increase the number of SKUs. So if we were to achieve the same organically, what would be the estimated time and capital investment required?
Unidentified Speaker
See, the only thing in terms of time, it could be anywhere, it could be two years, three years. Right. Or it could be even longer than that. In terms of the good question is, you know, it’s buy versus build. Right. So what is extra that you are paying to buy as compared to build? Okay. And what we are paying in goodwill is the only amount which is, which is, you know, paying over and above what we are physically acquiring the assets. Because those assets, even if we build organically, we would have to put. Right. So only the premium over and above the net assets that you are acquiring is what you know is your cost of buying versus building it yourself.
Right. I think our total goodwill will be what in our balance sheet, like less than 500cr? Yeah, about 400. So let’s say, you know, a revenue of 6,000 crores has been built with, you know, let’s say 400, 500 cross of. Of goodwill premium that was paid.
Unidentified Speaker
So, so as we are on the goodwill side, so I just wanted to know. So goodwill right now as on FY25 is 16% of the total assets. So would it be prudent to write it off entirely given that this could potentially improve our return ratios?
Unidentified Speaker
Yeah, but then it’s, you know, it’s. It’s tested for impairment every year. See, under indes you need to test goodwill for impairment. Under the accounting standard there was the concept of goodwill being amortized over a five to ten year period. But under India, under which we are covered, the India standards require that we test the goodwill for impairment at every financial period.
Divya Agarwal
Right.
Unidentified Speaker
There’s no amortization. Only if at all there is any impairment, then that is taken into the books. But otherwise it’s only impairment. Only impairment testing that needs to be done. No amortization.
Divya Agarwal
And lastly sir, there’s a money control article dated 30th May 2025 which reports that, you know, Server, which is a French dogmaker, which is a French drug maker, so it terminated the exclusive distribution agreement with Entero after AIOCD intervent monopoly concerns. So could this be a similar thing going forward as well in our acquisitions?
Unidentified Speaker
Let me first clarify that article because we never gave any response to that article. First of all, Surveyor, we are exclusive partner for them to promote certain of server brands in India. Like we are for Abbott or like we are for Roche. Right. So that contract was never terminated. What was the point of AICD was that you know why Entero is only supplying to all the stockists. So what was agreed that. Okay, Entero, sorry, server CFAs can also supply to the. To the same stockist, you know, instead of Entero. But marketing and promotion is still with us exclusively.
So.
Divya Agarwal
Okay, so sorry, go ahead sir.
Unidentified Speaker
So that Surveyor partnership has never been terminated in terms of marketing and promotion. So right now we have three agreements, right? Roche about and Server for. For pharma demand generation. Yes, for pharma marketing. Yes, for pharma marketing. Right. And the margin for this would be. Promotion margins are different than distribution margins. The promotion margins are higher, but the cost is also there. So we are putting around 150 people to promote and market Advert and Surveyor drugs.
Divya Agarwal
Okay. And the incremental margin that we get here is if we want to compare the margins here. So how much business point upside?
Unidentified Speaker
That margin is a confidential information between us and the company. Right. So it is difficult for us to disclose in a public forum.
Divya Agarwal
Sure, sure sir, thanks. I get that point. Thanks a lot.
operator
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments.
Unidentified Speaker
I would like to thank everyone for joining this call. I hope we have been able to address all your queries. For any further information, kindly get in touch with sga, our investor relations advisors. Thank you once again and have a great day.
operator
Thank you on behalf of Monarch Net Worth Capital Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.