Nomura has hiked the price target for Fortis Healthcare from Rs 700 to Rs 820. Additionally, the research firm has maintained its 'buy' rating.
"The Indian hospital sector has significantly re-rated over the past five years, and valuations in general for the sector are rich, in our view," stated Nomura.
Commenting on Fortis Healthcare's segment growth, the brokerage said, "We prefer FORH and expect it to trade in line with, or at a premium to peers, considering its stronger growth prospects as it leverages existing infrastructure through brownfield expansions that could further improve EBITDA margin and close the gap with peers. We like Fortis measured aggression in selectively adding to the network through acquisitions within its existing cluster."
In fiscal 2025, the hospital segment's revenue increased 14.8% on an annual basis, driven by higher occupancy, which grew to 69% from 65% in fiscal 2024. Another reason for revenue growth is attributed to a 9% increase in average revenue per occupied bed, according to Nomura.
"We see adequate scope for expansion of hospital Ebitda margin from mid-to-high 20s in the medium term," noted the firm while also underlining an underperformance in the diagnostics segment where the Ebitda margin took a hit due to a change in brand name, but Nomura said that it "expects a gradual improvement in growth and Ebitda margin in the medium term."
For the medical institute's outlook, the brokerage was largely bullish and remarked, "Fortis has one of the largest and most geographically widespread networks of hospitals and collection centres in the country. We see significant scope for the financial performance of Fortis to improve, as the company effectively leverages its network over time."
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