Entero Healthcare Solutions Ltd (NSE: ENTERO) Q4 2025 Earnings Call dated May. 28, 2025
Corporate Participants:
Prabhat Agarwal — Chief Executive Officer
Unidentified Speaker
Analysts:
Rahul Jawani — Analyst
Unidentified Participant
Harshi Shah — Analyst
Ish Mohit — Analyst
Shiv Kumar Prajapati — Analyst
Romal Jain — Analyst
Gautam Gossad — Analyst
Akshak Mehta — Analyst
Harshal — Analyst
Binoy — Analyst
Desai — Analyst
Mayank Agarwal — Analyst
Vant Solanki — Analyst
Swayam Rana Bhat — Analyst
Naman Bagreja — Analyst
Ankur Gulati — Analyst
Naman Bagrecha — Analyst
Presentation:
Operator
Hello, ladies and gentlemen, good day and welcome to the Q4 FY ’25 Earnings Conference Call of Entero Healthcare Solutions Limited hosted by IIFL Capital Services 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 the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. Please note, this conference may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on-date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr Rahul Jawani from IIFL Capital Services. Thank you, and over to you.
Rahul Jawani — Analyst
Yeah. Thank you. Hi, good afternoon, everyone, and I welcome you to Entergo Healthcare’s 4th-quarter FY ’25 earnings conference call being hosted by IFLE Capital. From, we have with us today the senior management team comprising Mr Prabad Agarwal, Managing Director and CEO; Mr Frame is the Whole-time Director and COO; and Black Morshek, Group CFO. I will hand over the call to the management for them to make their opening comments and post that we will open the floor for Q&A. Over to you, sir. T
Prabhat Agarwal — Chief Executive Officer
Hank you. Yeah. Thank you,. Good afternoon, everyone, and thank you for joining earnings conference call to discuss the operational and financial performance for quarter-four FY ’25. My name is. And on this call, I’m joined by, Co-Founder and CEO of Entero; Bala, who is the Group CFO; and SGA, which is 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 exchanges and on our company’s website. I shall provide a brief overview of the operational and financial highlights for the financial year, after which Bala will take you through the highlights of our Q4 FY ’25 financial performance. Let me begin by saying that FY ’25 has been a landmark year for Enterior Healthcare Solutions. We crossed INR5,000 crores in revenues, surpassed 100,000 customer-base across pharmacies and hospitals and achieved over INR100 crores in profit-after-tax. All have been significant milestones in our journey.
Also in the second-half of the year, we turned operating cash-flow positive. The above achievements give us the confidence in the vast scalability potential of our business model and also validates the market acceptance of our value proposition and right to win in this fragmented market. Our strategic playbook is centered around the following. Number-one, organic scale-up in underserved markets through expanding our geographic footprint and product segments and delivering better buying experience to our customers through deployment of technology-led solutions and efficient physical infrastructure and processes.
Our presence now spans 500 districts across 20 states, supported by 101 warehouses. We serve more than 95,300 retail pharmacies, which is almost one out of 10 pharmacies operating in India and 3,600 hospitals. Our product portfolio or FTU count has crossed 80,600 and we now work with over 2,700 healthcare product manufacturers. This gives us a truly unique national scale distribution capability, both deep and broad in a market that remains largely fragmented.
The organic growth is complemented with entry into new geographic markets and newer product segments through inorganic acquisitions that helps us to scale and penetrate the market faster. We successfully completed and integrated 10 strategic acquisitions during the year, contributing INR792 crores in annualized revenue. These acquisitions have expanded our geographic footprint in multiple new cities and diversified our product portfolio across new segments, including medical devices, diagnostic consumables and equipments, surgical consumables and specialty pharma.
The unique panelia distribution platform built from Gaba attracts many new healthcare brand partnerships and collaboration opportunities as the platform provides wide India each at one-go to every company that associates with us. We have further augmented our value-added service capabilities in terms of comprehensive commercial solutions covering both demand-generation and demand fulfillment. This brings us closer to our long-term vision of building India’s most comprehensive, efficient and digitally integrated healthcare distribution platform, which is difficult to replicate.
In terms of key financial metrics for the year, FY ’25 marked a period of solid growth, strategic expansion and improved operating metrics. We registered revenue of INR5,096 crores, achieving a 30% year-on-year growth rate, which includes 16% organic growth against an IPM growth of 8%, thereby outpacing the industry growth by 2x. Our gross margins improved by 57 basis-points to 9.5%, aided by margin-accretive categories and value-added services and procurement efficiencies. EBITDA rose by 53% year-on-year to INR172 crores with operating margins expanding by 52 basis-points to 3.4% with last two quarters margin being 3.7%.
Profit-after-tax for the year stood at INR107 crores, growing nearly 2.7 times from the previous year, underscoring the strength of our operating model and disciplined financial execution. In terms of business outlook for financial year ’26 and beyond. Looking ahead, we remain very optimistic about the long-term opportunity in the healthcare distribution space in India. The addressable market, which includes pharmaceutical, medical devices and surgical consumables stands at $33.2 billion US dollars and is expected to grow at 10%, 11% CAGR over next five years. Importantly, a shift towards organized distribution is accelerating and we are ideally positioned to lead this consolidation.
Our growth strategy going-forward will continue to rest on three fundamental pillars. First, we will sustain our organic momentum by onboarding new pharmacies and hospitals and increasing our wallet share with existing customers. Our organic growth has consistently tracked 1.5 to 2 times of IPM growth rate and we expect this to continue. Secondly, we will pursue discipline in organic growth with a proven M&A playbook and a robust acquisition pipeline, we’ll continue to onboard high-quality Regional payers that are strategically aligned with our long-term goals. We have already announced six new strategic acquisitions, which collectively would add over INR400 crores of annualized revenues and expand our geographical reach and further add to our business portfolio in the areas of stage generics, specialty pharma, medical consumables and devices. These acquisitions are EBITDA margin-accretive on blended level and would enhance our overall margins. We are being very selective in our inorganic approach and are targeting to acquire only those targets that add either new geography, new product segment or capabilities and are margin-accretive. While we expect the pace of acquisitions to normalize in a couple of years, in the near-term, our unutilized IPO proceeds give us the flexibility to capture attractive opportunities. Our FY ’25 revenue growth was 20% — was 30%, sorry, and we expect to deliver similar or better growth rates in FY ’26 also. Thirdly, we are committed to expanding EBITDA margins through margin-accretive product categories and value-added services, procurement efficiencies and operational efficiencies. We are targeting to exceed 4% EBITDA margins in FY ’26 on full-year basis. Fourth, our focus would be on improving working capital management, which in combination with margin expansion would provide positive operating cash flows in-full year ’26. To conclude, we remain committed to creating a truly differentiated technology-led and value-accretive platform in healthcare distribution that delivers sustained returns to all our stakeholders. I extend my heartfelt gratitude to our team for their unwavering dedication and to our shareholders for their steadfast support and trust in our region. With this, I’ll now request Balar to summarize the company’s financial performance for quarter-four and FY ’25.
Unidentified Speaker
Thank you, Prabad, and good afternoon, everyone. Coming to quarter-four FY ’25 consolidated financial highlights. Revenue for quarter-four is at INR1,339 crores, registering a growth of 29% on year-on-year basis. 11% of this growth is organic and 22% is from acquisitions. As mentioned by Pravad, we completed 10 acquisitions in FY ’25 and we have recorded INR225 crore revenue from these new acquisitions in Q4 FY ’25. The seamless integration of our recent acquisitions is expanding our geographic footprint in cities like Jaipur, Ujan,, Kamam and we also have expanded our category footprint along with driving meaningful margin expansion and is expected to enhance our operating leverage by unlocking scale efficiencies, enriching our product mix and aligning the acquired entities with our centralized technology-enabled platform.
Coming to gross margins, we recorded gross profit margins of 9.8% in-quarter four vis-a-vis 9% in-quarter four of the previous year, an improvement of 81 basis-points. This improvement in our gross margin reflects our focused efforts to scale high-margin categories such as specialty pharmaceutical, surgical consumables, diagnostic products alongside sustained procurement efficiencies enabled by our expanding scale and integrated supply-chain infrastructure.
Coming now to EBITDA, EBITDA for the quarter stood at INR49 crores, which is a growth of 69% year-on-year basis. EBITDA margins in-quarter four FY ’25 stood at 3.7% vis-a-vis 2.8% in the same quarter last year, recording an improvement of 86 basis-points. This margin expansion was achieved despite ongoing investments to support integration and scale-up of our recent acquisitions, underscoring our strength of the operating model and our ability to drive efficiency while building for long-term growth. Profit-after-tax for the quarter stood at INR31 crores, marking a 48% year-on-year growth, driven by strong EBITDA expansion and prudent financial management.
Our return on capital employed improved meaningfully to 11.6% compared to 9% in-quarter four FY ’24 and we managed to maintain our working capital cycle at 60 days, a reduction of three days from the previous quarter. With this, I would like to conclude the presentation and open the floor for questions-and-answers. Thank you.
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 touchstone phone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles the first question is from the line of from Capital. Please go-ahead.
Unidentified Participant
Hi, thanks. Congrats for the good set of numbers. Am I audible? Yes, if you are audible,. Yeah, yes, yes. Okay. So coming to the organic growth in the presentation, if you see the slide where we compare our organic growth IPM and other, there is some on the net margin impact of 3%. Could you explain what is it which resulted into growth organic growth being 11% for the current quarter. If you can explain that.
Prabhat Agarwal
Yes, in we had a change in agreement with one of our companies where you know we are providing super distribution services to them. And earlier recognizing the full revenue, now we are recognizing only the gross margins on that agreement. Okay, but that completely — that completely flows down to EBITDA, I believe, right? That flows to gross margins and after expenses flows to EBITDA.
Unidentified Participant
Okay. Okay. But does that impact like-to-like how should we look at because if I look at that, if I adjust the growth that 3% for the overall piece, I believe the growth would — growth number — revenue growth number will look a little better versus what we have reported, right? So this 11% is after adjusting for that. Yes, that’s what I’m saying. If we include that on a like-to-like basis, the growth would have been 32% 33% for the quarter.
Prabhat Agarwal
Yes, yes, correct, right. Okay. And does that impact our margin — profitability point-of-view or this is just an adjustment? Not meaningfully, not meaningfully. Then the reported margin for the current quarter 3.7%. On the like-to-like basis, it would have been lower, right, if you include the 3% revenue adjustment which we did. Yeah, to in some single-digit basis-point, yes.
Okay, okay. Okay. And the guidance of 4% plus for the full-year versus our earlier guidance that we will exit 4Q next year at around 5%. Do we see that trend of EBITDA improvement continuing or we will end-up somewhere little lower on the exit-rate run-rate basis? So the guidance we are giving you is that a full-year basis will be more than 4%, okay. Now quarter-by-quarter, it’s difficult to provide a guidance right now. In fact, last year also I had said that we’ll exist at 4%, which unfortunately we did not do, right? So I don’t want to stick my neck out on a quarterly basis and give — rather it is — the full-year performance is much better predictable as compared to quarterly performance.
Unidentified Participant
Got it. Got it. And lastly, on the PLS incremental acquisition which we are doing at INR42 crore INR45 odd crore for 16% stake. If I look at the numbers, what you have reported in the in the release, the revenue for the current year FY ’25 has grown at 10%. While the valuations seem to be relatively higher given that last-time around, I think we have paid around INR110 odd crores for this business. So I’m just trying to understand if you can look at it, the incremental attrition of 16% stake in the PLNG.
Prabhat Agarwal
Yeah, there is some good reason that will give you because it doesn’t — it’s not what it appears. Basically when we did this PLS deal, there was a subsidiary of PLES, which was actually commercially not part of the deal. So during the year, we’ve actually kind of sold that subsidiary and whatever proceeds were there from that sale that had come into the PLES. And as part of this tranche, we have actually transferred the Money that came in. If we exclude this one-off, the valuations are very much similar to what was done at the acquisition stage. Okay. Okay. And the cash-flow, if I look at first-half to full-year, we are still negative in the second-half, but your initial comment, you mentioned that OCF is positive in the second-half. Just trying to understand that because if I look at first-half of operating cash-flow is around INR62 crores negative versus full-year that it’s around INR77 crore. Just trying to connect. So when we are saying we are — are the — we were talking about the operating cash-flow. Cash-flow from operations, we are positive. We are positive about INR50 crores cash-flow from operations positive. You are looking at the overall cash-flow while we were looking at the cash-flow from operations, that’s what we mentioned that in H2, we’ve turned cash-flow operations positive.
Unidentified Participant
Okay. I’ll connect separately. Thank you. I’ll jump back-in queue.
Operator
Okay. Thank you. Next question is from the line of Harshi Shah from Capital. Please go-ahead.
Harshi Shah
Congratulations on the good results,. Just wanted some more clarity on improving working capital to be fully OCF positive next year. Yes. You know that’s an important focus area for us. And on a full-year basis for — see, I told you that on second-half of this year, which Bhara explained, we were OCF positive, right?
Prabhat Agarwal
We were OCF positive to the extent of around INR50 crores. But on a full-year basis, we were negative because in the first-half of the year, we were quite negative on OCF. And you will see that in the second-half of the year, our margins were much better than the first-half of the year in the last year, right? So this — once the margin trajectory continues to grow and working capital improves through our focus efforts, then next year will definitely be say positive you see any guidance on the net working capital days, which plan to make next year? See, our net working capital days on a quarterly basis is close to 66 days in-quarter four. There is definitely 5% improvement that we are planning for next year.
Unidentified Participant
Thank you.
Operator
Thank you. We take the next question from the line of Ish Mohit from SYC Research. Please go-ahead.
Ish Mohit
Hi, sir. And congrats for a decent set of numbers. Sir, can you just reiterate what was the guidance for FY ’25 when it comes to full-year margins and like working capital days if they’re improving? Sorry, can you please repeat again.
Prabhat Agarwal
So I was just saying, can you basically reiterate the guidance that we have for FY ’26 when it comes to growth and full-year EBITDA margin that we are seeing, not on a quarterly basis, just a broad direction for FY ’26? So if three guidance items. One is on a revenue growth, which we said this year we had 30% growth. Next year also we are targeting more than 30% growth. On EBITDA margin basis, on a full-year basis, 4% plus EBITDA margins for the coming year. And operating cash-flow positive for next year, which will be a combination of both reduction in working capital days and also higher margins. Right, right. And sir, just in terms of like this industry environment right now, how are you seeing the IPM industry environment right now because we’ve seen a lot of domestic pharma companies reporting basically no slowdown, which is happening.
So how are you seeing the industry environment? Yeah, we are seeing the same trend. If you look at the last year, the whole entire year, the industry growth rate was only 8% and last two quarters was like 7%, right? So historically industry has grown in double-digits earlier and which has come down to-single digits for the last year, right? So we are seeing definitely slowdown on the industry growth rate. And that’s still in my — I always give guidance in terms of our growth rate relative to industry growth rate.
Right, right. Right. And I think we have like finalised some five acquisitions in for I think which will get executed in FY ’26. Are there any more acquisitions in the pipeline? Yes, there are more acquisitions in the pipeline,
Ish Mohit
Okay, sir. Thank you all the
Operator
Thank you. We take the next question from the line of Shiv Kumar Prajapati from Ambit Investment Advisors. Please go-ahead.
Shiv Kumar Prajapati
Yeah, hi, sir. Thanks for having my question. Hope I’m audible. Hello, am I audio? Yes, you are. Little bit of noise, but sorry for the inconvenience. So sir, my first question, sir. I want to interrupt Shev Kumar, sir. Could you please move to a quieter area? There’s a lot of background line or you may return. Am I audible now? Is it clear now? Yes you are audible. Go-ahead.
Yes, great, sir. Sir, my first question is on standalone basis, you are not being that great. So sir, could you please throw some light like why there’s such a poor performance on standalone basis? And on the following part, when will turn EBITDA-positive on the standalone financial statements? And third one is what’s the guidance tax-rate for FY ’26?
Prabhat Agarwal
Let’s see. So we are not looking at standalone. We are — internal is a network of subsidiaries, both holding company and subsidiaries, right? So it is difficult to give standalone or subsidiary by subsidiary guidance. So we always give a guidance on a small basis, which I just given in the previous question. Okay, sir. And sir, what would be the tax-rate for FY ’26? See our you know tax-rate the corporate tax-rate is 25%. So companies make an effort to optimize on tax-rate you know to more tax-efficient strategies. But for the time-being, we’ll take the guidance of 25% corporate tax-rate. Integrated
Shiv Kumar Prajapati
Thank you.
Operator
Thank you. Next question is from the line of Romal Jain from Electrum PMS. Please go-ahead.
Romal Jain
Yeah, hi, sir. Am I audible?
Operator
Yes, you are.
Romal Jain
Yeah. Sir, my first question is, I just want to understand the companies which we have acquired, so one game would be at what margin level at the gross EBITDA, whatever you can give some color on? And when are they included in our organic kind of pool? So one year or two years down the line, they come in the organic pools. Give some color on that? Yes, you know, only in the first year of acquisition is where they are considered under inorganic. Post that it is considered under organic only because after that we are in control of that company and we manage that business.
Prabhat Agarwal
Okay. And what margins they would be at as just dissecting between the earlier businesses that you have — that you have acquired and the new businesses. So I can only say that the businesses that we have acquired are margin-accretive. So they are at a margin higher than our current margin. So it’s going to add to our overall margin profile. We are not — we are not acquiring anything which are margin-dilutive.
Okay, okay. And on the organic side, I just wanted to understand, so let’s say whenever these companies come under the organic market, going ahead when our acquisitions kind of slow-down maybe in a year or two, the — so your guidance is definitely 1.5 to 2 times the growth rate of ITM. So do we still see that if the IPM grows at about 8% to 10%, probably we should grow between 15% to 20% than the initial slowdowns. Yes, so organic growth rate is independent of inorganic, right?
So based on our value proposition, based on our right to win based on this fragmented nature of the industry, we expect that our growth rate will exceed the industry growth rate by 0.5 to 1x. Sorry, how much sir? 1.5 times to 2x of industry growth rate. Okay. And the margins are broadly on-track to reach 4% or maybe higher than that in three years’ time — what would contribute to that? I just gave a guidance that in FY ’26 we should exceed 4% on a full-year basis.
Romal Jain
Okay, sir. Thanks. I’ll come back-in the queue. So all the best.
Operator
Thank you. Next question is from the line of Gautam Gossad from Monarch AIF. Please go-ahead.
Gautam Gossad
Hi, sir. Thank you for the opportunity. Sir, my question is basically on the organic business. So basically you explained that we will grow at 1.5x to 2x of the IPM growth. But my question here is that our — in the last like Q4 FY ’25, we have done 11%
Unidentified Speaker
Organic growth versus earlier in the year doing 15% 16%, 17% growth. You are saying that we will have a similar rate in FY ’26 as well. So can you explain like how will we catch-up the growth which we did in Q4 and how should we look at it the industry growth as well as our growth in FY ’26?
Yeah. So except for this quarter, if you look at our growth rate for the full financial year for FY ’26, our growth rate was 2 times of industry growth rate of — which is on the higher-end of our range that I gave you, right? And we expect that the same will continue. You know, there typically what happens in 4th-quarter, there is a little bit of slowdown from our side also because you know, at the end-of-the year, most of the accounts and all we kind of reconcile with our customers. You know, there is lot more focus on collections rather than on-sales under six operations at around INR400 crores.
Prabhat Agarwal
So I would like to know more about the payout which we’ve done for these acquisitions and understand like we have a cash of around INR250 odd crores. So will that cash be enough to fund our future acquisitions or do we envisage a further plan or a debt plan for the same? See, as of now, we don’t have a new fundrais plan, okay, because the IPO that we did a year back has given us — we still have unutilized proceeds from that IPO and our balance sheet also we have significant cash.
So I don’t see — I don’t any plan in our thinking. So recently you see once we start generating positive operating cash flows you — that amount will be available for acquisitions without. Understood. But sir, these acquisitions which we’ve done recently this acquisition, how much payout done for the same because this will come in the FY ’26 balance sheet, right? Yeah, so you know normally we just we don’t give exact payouts for you know, even for both and wire perspective but we I can tell you that the multiples are in the same range that we had guided before.
Gautam Gossad
Okay, okay, got it think we can take it offline.
Unidentified Speaker
Okay. Thank you.
Operator
Thank you. We take the next question from the line of Akshak Mehta from Seven. Please go-ahead.
Akshak Mehta
Hello, sir. Am I audible? Yes, yeah. Sir, first question that I have is, I just wanted to understand last earnings call, we were guiding for a full-year growth of around 35% to 40% and we have kind of missed that mark by at least 5% to 10%. I just want to understand what is the key driver that we kind of resulted in a lower-growth than what we had guided earlier. You know, on a — on a full revenue recognition basis, our growth rate for this year was close to 31%, right, after adjusting for the quarter-four you know, change in recognition method.
Prabhat Agarwal
So it’s like 4%, we are below you know, in terms of guidance that I gave and it is primarily because in the delay in timing of acquisition? Next year should we see a sign of a higher organic growth because the acquisition will ramp-up there, the part of the acquisition will be shifted a bit to next year. Should we see higher-growth on access, sir, I’m so sorry to interrupt, but there seems to be a lot of disturbance from your — sorry, I should be much better now.
Yeah, is there an — if you’re connected on two devices, there’s an echo. Yes. No, no, sir. I’m fine now. Sorry, sir, I just wanted to ask if next year, there will be a better organic growth since the ramp-up of the acquisition will take place majorly in the next year of these 10 acquisitions. Next year growth will be a combination of three factors. One is the organic growth on a continuing business. Number two will be the full-year impact of acquisitions that we did this year and new acquisitions for next year.
So it will be a combination of organic growth on continuing business, you know, full-year impact of acquisitions that we did this year, but we recognize revenues for the full-year next year and the new acquisitions that we want to do in the day. Okay, sir. Also, I wanted to just have a clarification, sir. Did we say it is target for how many acquisitions do you want to do this one in FY ’26? No, we are not giving a specific numbers. But as I told you that we have already done more than INR400 crores that we have announced. And we have a pipeline, will continue to more.
Akshak Mehta
Okay. Last question, sir, I just wanted to understand we have written in our Board meeting outcome that canceled the acquisition of one of the companies. I think, what is the reason for that if you can share well, we we actually cancel that because we have a better target which got available in the similar market with better margins and better political revenue profile.
Okay, sir. Thank you.
Operator
Thank you. We take the next question from the line of Harshal from Asset Capital Markets. Please go-ahead.
Harshal
Good afternoon, sir, and thanks for the opportunity. Sir, just one clarification wanted to know. For FY ’25, did you see that 11% of the growth in organic revenues for ’24? Yes. Only for quarter-four, yes. Okay. And sir, what would it be for the full-year? 16%. Okay. And the balance I guess would be through the inorganic acquisition stack with.
Prabhat Agarwal
Right. Okay, okay. Sir, that was it. And second thing, sir, would it be a good thing to kind of assume that or probably go-ahead that in FY ’26 also, we should be doing almost a similar level of acquisitions as we did in FY ’25. So what we said next year, I gave you kind of a revenue guidance, right, which is upwards of 30% and this will be a combination of organic growth, you know, know new acquisitions and full-year impact of last year acquisitions.
Harshal
Okay. Correct. Okay, sir. That’s it. Thank you. Thank you so much, sir. All the best sir.
Operator
Thank you. Next question is from the line of Binoy from Sunidhi Securities and Finance Limited. Please go-ahead.
Binoy
Yes, hi. Am I audible?
Prabhat Agarwal
Yes, yes, you are.
Binoy
Okay. So one question on the recent acquisitions that you’ve made, a few of them have — are on the North Indian side of the geography. I believe that market is a little more competitive as compared to the Southern Indian market. So will these acquisitions be margin-accretive for us?, you are absolutely right. The Northern part of the banking is little more competitive than the part. But the acquisition that we have done is in specialty Pharma. It’s not pure generic retail business, right?
Prabhat Agarwal
So the margins are higher in that segment. And that’s the reason we acquired that understood. Could you give a ballpark range of the margins of these acquisitions in aggregate? We haven’t given that number, but you can take it as that they are higher than what we are today. It’s a range. Some are at a little higher, some are much higher, but on a blended basis, they are higher than where we are today.
Okay. In one of the previous presentations, you’ve mentioned that the acquisitions EBITDA margin range is roughly about 6% to 8%. Would these acquisitions also be in that range? Can I assume that? Yes. Okay. A couple of bookkeeping questions from my end. If you could just help me with the sales and marketing revenue for FY ’25. Likewise, how much revenue came from the hospital segment for FY okay around 20% 25% is from hospitals okay and the sales in marketing revenue you mean to say the business where we are doing marketing and promotion also? Yeah, for the pharma company.
Yes, yeah, it’s around less than 5% less than less than 5% okay. Okay. And how much of the revenue would be coming from medical devices and surgical instruments, etc? At the control level across all our geographies close to 10%, I would say okay, okay. Okay. Okay. One last point. I was just looking at the warehousing network, the number of warehouses on Q-o-Q basis have been kind of consolidated and likewise the overall network has consolidated. I also see the PINCO and the district coverage also consolidated as compared to the last year. So anything to highlight out here? No, no significant highlight here. You know these marginal small you know plus and minuses is difficult to explain, but no major no major or significant thing to talk about.
Binoy
Okay, okay, that’s all from my side. Thank you so much.
Operator
Thank you. Next question is from the line of from YES Securities. Please go-ahead.
Unidentified Participant
Yeah. Hi, sir. Good afternoon. Sir, I just want to understand one thing. I mean, we have a long list of subsidiaries. I think if I missed this question if somebody had asked this earlier. Sir, do we ever intend to merge this into or we plan to continue running it in like a subsidiary only and why so because I mean, do you think it’s operationally better that way or the is the rational behind this?
Prabhat Agarwal
In ideal word, you know you would want one company to operate across India, right? But then because of our acquisitive nature of business whereby we have bought stakes in multiple companies. So — and those two companies have very strong regional goodwill and regional local name, which we want to preserve at least in the first few years. So we are not likely to mark them in the immediate future, but yeah, in the longer-term, we will definitely kind of look at it.
Binoy
Got it. So after a couple of years, because operationally, I assume it’s a hassle to manage so many subsidiaries because every year we have this year we did 10 acquisitions coming year also, we’ll probably see a similar number. But there is a little bit of a higher compliance cost and all because of this structure.
Prabhat Agarwal
Correct, correct. But they are integrated on our technology base. So operationally, it’s much easier to manage.
Unidentified Participant
Understood, sir. That’s it from my side. I just wanted to have a clarity on this, sir. Thank you so much.
Operator
Thank you. Next question is from the line of Desai from Electrum Capital. Please go-ahead.
Desai
Hi, sir. Sir, my question was in the medium-term, could say EBITDA margin growth, can you give us ballpark guidance in that three to five years I it for next year, right? Yeah. So sir, I just wanted to understand in the medium-term, where can this number go? Once the scale comes in, like we are growing at 30% in the next year and then going ahead, we can do double-digit growth. So where could the EBITDA margin go once the scale comes and when you say medium-term, how — what’s the timeframe that you’re looking at?
Prabhat Agarwal
Three to five years, sir. So for example, I said that next year is 4% plus, you know. And you know earlier I had told about we should be targeting close to 5%, right. So the year beyond, we should reach towards that or move over that.
Operator
Okay. Thank you. We take the next question from the line of
Unidentified Participant
From around INR1,000 crores, right? Yeah. Sorry, you’ve done acquisition of about INR780 crores last year, right? In FY ’25, part of it already came in FY ’25. Right. So my question is in FY ’26, I mean, how much was recorded in FY ’25 and the remainder, of course will be the delta for FY ’26. So delta would be around INR500 crores.
Prabhat Agarwal
Okay. So-far you recorded about INR250 crores for in FY ’25. Going around INR250 crores was for quarter-four. Yes. So overall, we’ve recorded around INR500 crores. Okay. So the delta is about INR250 crores for next year. No. Yeah, but this business is also growing, right? So, of course, of course, of course, of course. And secondly, what’s the IPM growth and organic growth assumption that you have in this 30% guidance that you’ve given? 8% — net 8% you know IPM growth, 15% to 15% organic growth. Okay. And lastly, in the long-term, where do you think the working capital settles? I think you know some very long, but near-term it will be 60. Yeah, I mean next two, two years, two years we should target that 68.
Okay. And the delta — the improvement will come from — will it come from receivables or will it come from the inventory in warehouses? Will be a combination of both.
Unidentified Participant
Okay. Okay. Thank you.
Operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit your questions to one per participant. Next question is from the line of Mayank Agarwal from Scientific Investing. Please go-ahead.
Mayank Agarwal
Yeah, good afternoon, sir and thank you for the opportunity. So I have one question on the working capital, like right now we have a 70-day cash conversion cycle. And if we estimate like you would need around 20% of sales as working capital. Now assuming the current margin levels, it appears you can support around 15% annual growth organic without the need of the external funding. Like however, like you have stated the ambition is to grow around 20% to 30% CAGR for the next few years. So how do you see the debt and equity playing a role in this funding this growth? And would you agree with this assessment and how are you planning for the capital structure accordingly going-forward?
Prabhat Agarwal
So that’s what I said in the previous guidance that once we move to 4% plus margin structure and 60 days of working capital, the — the internal approval will be more than enough to support organic growth. And only for inorganic, we will use external capital, which we have already raised to IPO. Okay. And like if I can — one more question.
Operator
I’m so sorry to interrupt. May I request that you rejoin the queue for follow-up questions? There are several other participants later. Okay. Thank you. We take the next question from the line of Vant Solanki from RSP and Ventures. Please go-ahead.
Vant Solanki
Hi,. I just want to understand that last year we are — we were talking about that we are doing the acquisitions which have EBITDA margin to 6% to 8%, right?
Prabhat Agarwal
So in a long-term future of, can we assume that our margin also will go to 7% in long-term future or just because of a go for overheads, we will stick around 5.5% or 6% around so I stick only to guidance for next year, longer-term guidance and maybe the FY ’27 guidance maybe I will be sometimes during the year and by end-of-the year.
Vant Solanki
Okay. And just one more. Like I was going through the, which we have acquired, the acquisition value is around INR70,000 but annualized revenue for quarter — financial ’25 is more than INR100 crores. So what kind of arrangement is there? Because you have given that it is a proprietary firm and you acquired.
Prabhat Agarwal
No, sir, the model that we operate with, we create an SPV in which the business is into, right? And the value that we have given is the — only the value of acquisition of shares, but we will pay separately for the value of the business that is lump paid. So that value is not included in the value that we give, because it’s not directly paid to the seller.
Operator
Okay. So request that you rejoin the queue for follow-up questions? Sorry to interrupt. What I’m saying is you can please connect with our CFO offline on this. He will be able to explain you better the structure as we follow. And this is a — that is something we have been following this sector since beginning. Thank you. Next question is from the line of Ajesh from Investor Thinks. Please go-ahead
Unidentified Participant
. Am I audible? Yes. My question is that do you have any long-term target of ROE? I mean in five
Prabhat Agarwal
, six years, what will be our ROE once you know, once we are able to reach those margins that we spoke about and that working capital target, we should be 15% 20% ROE.
Vant Solanki
Okay. Thank you.
Operator
Thank you. Next question is from the line of Swayam Rana Bhat from Pinpointext Capital. Please go-ahead.
Swayam Rana Bhat
Yes, sir. Sorry, sir, I joined a bit late. So pardon me if my question has already been addressed. So I have only one question. Could you like elaborate on the direct benefits pharmacists and retailers experience as a result of acquiring the regional distributors? Specifically, how do these acquisition improve aspect like fill rates, credit periods and what other industry challenges are we solving for the retailers?
Prabhat Agarwal
Yes. The biggest challenge that retailers are facing is fill rate today, right, because first what has happened is the number of SKUs in pharma is huge because of the branded generic nature of the industry. And as you know, it’s a very fermented and low entry industry. That’s why you have so many regional companies, local companies, national companies operating, right. And is struggling typically to provide all the items of the prescription to the patient. Typically we see that the fill rate of is not more than 60%.
So if five drugs are retain prescription is only able to offer three or two or three, right, because we just can’t store and manage so many SKUs. The problem that we are solving for the customer is basically the range. So from one shop, from one of our warehouse, we can get the entire range because we are working with 2,500 pharmaceutical companies. So we have a very huge product range available with us and which helps us to give you one shop that makes buying much more much less complex is experienced much better. And most of the geographies we are delivering three times or four times during the range. So our delivery pack time is also much lower. So combined with a lower delivery timeline and you know, huge product range the customer is able to improve his own overall sales that is shop and also optimize his inventory at its shop.
Swayam Rana Bhat
Got it, got it. Thank you for the — for answering my question. I’ll turn it back-in queue. Thank you.
Operator
Thank you. Next question is from the line of Naman Bagreja from IIFL Capital Services Limited. Please go-ahead.
Naman Bagreja
Thanks for the opportunity. Sir, just one question. Our second-half OCF is positive for this year. Last year also our second-half OCF was positive. So is it a second-half phenomenon where OCF is positive or let’s say, working capital is lower or could you help me understand that?
Prabhat Agarwal
So if you take the pharmaceutical industry and try to divide the sales quarterly. Typically, the second and 3rd-quarter are high sales period. And by fourth quarters generally the sales taper down because end-of-the year and low season. And that’s always followed in our case also. Typically you see the highest-level of working capital till September because that’s the peak season where you are operating at, just a monsoon period and post-monsoon is where the season is very-high and you have to store and all that, right, and which kind of normalizes by end-of-the year, right?
So our — so you are right that last year we were operating cash-flow positive for second-half of the year, but not for the entire year. And that’s what I guided that next year we are targeting to be OCF policy on a full-year basis.
Naman Bagreja
Okay. Okay. Okay. Sir, if I may ask one more question.
Operator
Sir, may I request you to rejoin the queue. Thank you. Participants are requested to limit questions to one per participant and rejoin the queue for follow-up questions, if any. Thank you. We take the next question from the line of Ankur Gulati from Genuity Capital. Please go-ahead.
Ankur Gulati
Yeah, hi,. Just if you can give us some of — I mean how the industry has played out in the US and how do you see it involved in the industry — any industry to learn from the US consolidation. US is on the other stream of consolidation. There are three distributors who have more than 90% market-share. I — India is also moving towards consolidation, but it’s not likely to go at that same level in near-term at least. And what are the factors which drove US and what are the entrances in India just for our investment?
Prabhat Agarwal
So India is much more complex geography compared to US. US and higher pharmacies are only 65,000. In India, our customer-base is more than entire in pharmacy operation of US. So India is 1 million you know customer segments, 1 million pharmacies in India, very complex. So you know you can’t supply to Guahati from Mumbai, right? So we will have lot of regional centers and regional warehouses that you would have to make closer to the customers. Number of SKUs in India is so much more than US. US is a generic market, which is not a branded generic. India every molecule has 100 brands. So these complexities add to the challenge of consolidation. Any market-share.
Ankur Gulati
MR., I’m so sorry to interrupt. May I request that you please rejoin the queue for follow-up questions? Okay. Thank you. We take the next question from the line of Naman Bagrecha from IIFL Capital Services Limited. Please go-ahead.
Naman Bagrecha
Thanks for the follow-up. Sir, just one thing on the revenue growth. So we’ve guided for 30% growth in FY ’26. It is equally divided between organic growth and impact of last year acquisitions and the new acquisition. If I look, if we do just a simple math of 15% kind of growth on FY ’25 number, which is closer to INR764 crores. What we have announced the acquisition, if I look the revenue would be closer to INR300 crores, given that the consolidation will happen post 15th August, right. So is the guidance a bit lower because then INR300 crore vers crore, if INR50 crore kind of number is the balance number, which is your revenue from last year’s, let’s say, acquisition. So is the guidance a bit lower or the organic growth might be slower than our expectations? It would be helpful if you can help you.
Prabhat Agarwal
No, you are working out the match very well level. And you know what we want to give is a more guidance that we are 100% sure of deliveries. Nothing stops us from delivering more than our guidance, right?
Naman Bagrecha
Sure. Sure, sure, sir. All the — and sir, just one question.
Operator
If you can help us please. I’m so sorry to interrupt. I request you to rejoin the queue for follow-up questions. Thank you. Next question is from the line of Binoy from Sunidhi Securities and Finance Limited. Please go-ahead.
Binoy
Yes. Thank you for the opportunity to ask follow-on questions. I follow-up one strategic question on the industry. So Indian government is mulling OTC healthcare policy and it has been mulling this policy since quite some time. Of late, it was again in the news that the government might allow distribution of — or let’s say, actually retailing of OTC medicines through general — general trade stores as well, which is the Kirana store, etc, right?
Unidentified Speaker
So just your thoughts on this, where are we in terms of OTC healthcare policy? And if it gets implemented, how does that impact our business? So as of now, our customer-base does not include Kirana stores, okay. You know it doesn’t include Kirana. So we are focusing only on the on the retail pharmacies and hospitals, right? So if you know, if part of the sales of OTC moved away from retail pharmacy to Kiranha stores, either we will have to prepare a plan to reach-out to Kiranha stores or we will — the industry size will become smaller for us. Our addressable market will become a little smaller for us. But wouldn’t you be as a distributor getting back to
Prabhat Agarwal
To new level. Yeah, go-ahead. Sorry. Yeah. So as a distributor, since you are you one leg before the retailer in the chain, wouldn’t you just as you are distributing to the chemist, wouldn’t you essentially be distributing to Kirana stores as well because you are distributed through the company, right? Choice. It’s a choice that we will have to exercise, whether we want to just go for very, very few products to Kirana store or we don’t — because we’ll have to work-out the economics of doing that because your average order value will not be that high, right?
Binoy
Understood. Understood. Okay. Thank you so much.
Operator
Thank you for the comments. Thank you. Next question is from the line of Shah from Capital. Please go-ahead.
Unidentified Participant
Hi. Two quick questions. What is the timeline to complete remaining acquisitions? And second, all of the newer acquisitions made last year will have a full-year revenue. So can we see margin upwards this 4% because they are margin-accretive, right? On a full-year basis, yes, so — but we are declaring quarterly margins, right?
Prabhat Agarwal
So the acquisition that we middle of the year, in the last quarter they are included or quarter three is included, but not in the full-year. So full-year will be there. Yes. And the timeline to complete the remaining acquisition?, may I request that you read let my suggestion to you will be let’s continue the question so their flow is complete. Otherwise, you know it’s — they will have to come back and then again reiterate the whole thing. Sorry, what, what are you saying? The timeline to complete the remaining acquisition. I think the timeline given is two months, right, so two an hour, but we’ll try to close it faster than that.
Unidentified Participant
Understand. Thank you.
Operator
Thank you. Next question is from the line of Desai from Electrum Capital. Please go-ahead.
Desai
So my question was what is the plan for write-up of intangibles in future or now hello. Hello, am I audible? Yeah. Yeah,. Yeah, so basically what we are doing is we have goodwill, which is tested for impairment at every financial year. So goodwill is — since we follow, the requirement of the standard is that we do an impairment testing. There is no requirement of amortization of those goodwill. So we do the impairment testing every year. Okay, sir. Thank you.
Operator
Next question is from the line of Naman from IIFL Capital Services Limited. Please go-ahead.
Naman Bagreja
Thanks. Just a quick one. Just wanted to know what is the total purchase cost of all the seven transactions, so six new entities. So I mean, you could give also the only six new entities and sevens is available. I mean, we are less transaction about the retail so give you own the total cost of transition. We only give second the total consideration we don’t disclose because of confidentiality reason from the seller side also.
Prabhat Agarwal
Okay, okay. Okay. So I just said multiple will be at an aggregate level will be between 0.3, 0.35 times of revenue or is there any deviation? The guidance that we give is the multiples are between 5 times to seven times of EV-to-EBITDA. So within that range. All the thanks.
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. Over to you, sir.
Prabhat Agarwal
Thank you. I would like to thank everyone for joining the call. I hope we have been able to address all your queries. For any further queries which has not been answered, please connect with our Investor Relations team. Okay. Thanks again for your time. Have you. Thank you, everyone.
Operator
Thank you, sir. On behalf of IIFL Capital Services Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines