Entero Healthcare Solutions IPO: 10 key risks investors should consider before subscribing to Entero IPO

Entero Healthcare Solutions IPO opened for subscription on Friday, February 09, and will close on Tuesday, February 13. Entero Healthcare Solutions IPO strives to be completely booked on the second day. The retail and employee portions seem to be responding well. Reviews for the Entero Healthcare IPO from brokerage houses have been mixed. At the end of day 1, Entero Healthcare Solutions IPO subscription status was 10%.

Entero Healthcare Solutions IPO price band has been fixed in the range of ₹1,195 to ₹1,258 per equity share of the face value of ₹10. Entero Healthcare Solutions IPO raised ₹716 crore from 25 anchor investors at the upper price band of ₹1,258 per equity share.

"Exciting news! Mint is now on WhatsApp Channels 🚀 Subscribe today by clicking the link and stay updated with the latest financial insights!" Click here!

Entero Healthcare Solutions IPO has reserved not less than 75% of the shares in the public issue for qualified institutional buyers (QIB), not more than 15% for non-institutional Institutional Investors (NII), and not more than 10% of the offer is reserved for retail investors. The employee portion has been reserved equity shares worth up to ₹8 crore, and a discount of ₹119 per equity share is being offered to eligible employees bidding in the employee reservation portion.

Also Read: Entero Healthcare IPO: Issue receives tepid response from investors on Day 01; Check GMP, Entero IPO subscription status

Entero Healthcare Solutions IPO, which is worth ₹1,600 crore, comprises a fresh issue of ₹1,000 crore, and an offer-for-sale (OFS) of up to 4,769,475 equity shares by the promoters and other investors aggregating up to ₹600 crore.

The promoters selling shareholders are Prabhat Agrawal, Prem Sethi, and OrbiMed Asia III Mauritius Limited. The biggest shareholder to sell is OrbiMed Asia III Mauritius Limited, which is offloading 3,815,580 equity shares. Prabhat Agrawal and Prem Sethi will sell 470,210 and 313,472 equity shares, respectively.

Also Read: Entero Healthcare Solutions IPO opens today. GMP, subscription status, review, other details. Apply or not?

The company intends to use the net proceeds from the fresh offering to finance the following goals: financing the company's long-term working capital needs for Fiscal Years 2025 and 2026; pursuing inorganic growth initiatives through acquisitions; and general corporate purposes. Repayment or prepayment of certain borrowings that the company has taken out may be done in full or in part.

Also Read: Entero Healthcare Solutions IPO: From financials to key risks, here are 10 key things to know from RHP

The Entero Healthcare Solutions IPO's book running lead managers are ICICI Securities Limited, Dam Capital Advisors Ltd (formerly Idfc Securities Ltd), Jefferies India Private Limited, JM Financial Limited, and SBI Capital Markets Limited. The issue's registrar is Link Intime India Private Ltd.

Here are some of the key risks listed by the company in its Red-Herring Prospectus (RHP):

• Since its establishment, the firm has acquired other Indian distributors to grow its clientele and operations, and it may yet make further acquisitions in the future. But it's possible that the business won't be able to properly reap the rewards of previous or upcoming acquisitions.
• Operating, finance, and investment activities have historically resulted in negative cash flows for the company, and this trend may persist going forward.
• Customers returning items that are hazardous, expired, faulty, ineffective, or counterfeit, as well as product spoilage, breakage, and damage during shipment or storage, might result in losses for the firm and damage to its reputation.
• Under the terms of their financing agreements, the company's lenders have placed some restrictive requirements on them, which might negatively impact their capacity to conduct business and hinder their ambitions for future expansion.
• The company has a significant amount of debt and requires a lot of working capital to run its operations. An inadequate quantity of working capital or necessary finance might have a negative effect on the company's operations and profitability.
• The company has pledged equity shares of some of its subsidiaries to certain lenders. Should events of default occur under the financing agreements, these lenders may invoke the applicable share pledge agreements, which would have a negative impact on their operations, financial performance, and future prospects.
• With trade receivables, the company is exposed to credit risk.
• Since the clients of the firm are not bound by long-term contracts, their ability to end their business associations abruptly might have a negative effect on the organisation.
• The inability to maintain ideal inventory levels may result in higher operational expenses or in the inability to satisfy client orders, both of which might negatively impact the company's operations, financial standing, and future prospects.
• Price changes for prescription drugs might have a negative impact on their business operations and financial results.

Also Read: Entero Healthcare Solutions IPO day 2: Check GMP, subscription status, review, key dates, more. Should you subscribe?

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.