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Prabhudas Lilladher Report
Fortis Healthcare Ltd.'s Q2 FY24 hospital Ebitda was in-line with our estimate, led by divestment of Arcot road unit and seasonality. Though hospital margins improved to some extent in Q2, we see further margin improvement in hospital segment aided by-
improving case and payor mix,
cost rationalisation initiatives and
divestment of non-profitable assets.
Our FY24E and FY25E Ebitda broadly remain unchanged. We expect 18% Pre Indian Accounting Standard Ebitda compound annual growth rate over FY23-25E.
At current market price, Fortis Healthcare is trading at 19 times enterprise value/Ebitda on FY25E, adjusted for Agilus stake.
Maintain ‘Buy' rating with revised target price of Rs 400/share (Rs 365 earlier); valuing hospital and diagnostic segment at 20 times EV/Ebitda on Sept 2025E.
Resolution of legal issues and further monetization of non-profitable assets would be a key additional trigger for re-rating.
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