Fortis Healthcare can move to Rs 120- 125: SP Tulsian

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Fortis Healthcare can move to Rs 120- 125: SP Tulsian

Fortis Healthcare can move to Rs 120- 125 in next 1 year, says SP Tulsian, sptulsian.com.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by SP Tulsian See what other Experts & Brokerages are saying about Fortis Health See messages about Fortis Health

Fortis Healthcare can move to Rs 120- 125 in next 1 year, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "If you see the trigger for the correction of Fortis Healthcare has been the acquisition of the Fortis International, again a company which is held by the promoters and this has been acquired by the Fortis India for USD 665 million and that has not been seen well by the market for the corporate governance issues and all that. But the beating has to stop at some point."

He further added, "The portfolio of the hospitals which are been acquired, 9 hospitals and all that are not bad and I don't think there has been any reservations or apprehensions on the consideration amount. Because in the interim period some of the amount was financed by Fortis India but coming on the point that in my opinion stock looks to have bottomed out because now if you see the portfolio of the combined entity they will be having 12000 beds with 74 hospitals in 9 countries and they will be one of the largest in Asia and if I compare this with Apollo Hospital they have about 8500 beds and if you see now the Apollo Hospital market cap close to 7500 crore this is having a market cap of 3500 crore and if you see the performance first half performance has really improved, the top line has been at Rs 1100 crore and in the concall management has given indication that the revenue from the international operations which are being acquired by the company is also equal to the Indian operations. That means one can expect Rs 2200 to 2500 crore annual top line from both the portfolio. That means on a combined entity basis for FY13 company should be able to have a top line of close to about USD 1 billion or may be about 4800-5000 crore and now the only concern remains in the company is the profitability because first half they did not have any profit, Rs 1 crore."

"For FY11 the PAT of Rs 125 crore came largely from other income. So I think once the profitability starts improving this share can quickly bounce back because hospitals and specially the larger ones are enjoying a very high PE multiple on the stock exchanges. If you see Apollo Hospital is ruling at a PE multiple of close to about 25-26 on the forward earning and on the historic it is at 28-30. So taking the same point further as I elaborated in Sesa Goa this stock also seems to have a very limited bottom down side I don't think that stock can really fall below Rs 80. I am not talking on a hourly or daily movement on the technical chart but on a fundamental basis I don't see value slipping below Rs 80. So one can keep a price target of Rs 80 in their mind and I expect that price can move to Rs 120- 125 in next 1 year."

Disclosure - I have no personal holding or interest in any of the stocks discussed.