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Buy Fortis Malar; target of Rs 45: Sunidhi Securities

Sunidhi Securities is bullish on Fortis Malar Hospitals and has recommended buy rating on the stock with a target of Rs 45 in its April 17, 2013 research report.

April 18, 2013 / 11:06 AM IST
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Sunidhi Securities is bullish on Fortis Malar Hospitals and has recommended buy rating on the stock with a target of Rs 45 in its April 17, 2013 research report.
“Established in 1992, Fortis Malar Hospitals (FMHL), formerly known as Malar Hospital, is one of the distinguished multi super-specialty corporate hospitals in Chennai providing comprehensive medical care in areas of cardiology, cardio-thoracic surgery, neurology, neurosurgery, orthopedics, nephrology, gynecology, gastroenterology, urology, pediatrics, diabetics and so on.”
“FMHL is a household name for tertiary care hospital services in Chennai. Late 2007, Fortis Healthcare – India’s fastest growing hospital network, led by the vision of late Dr. Parvinder Singh of creating an integrated healthcare delivery system in India acquired stakes Malar Hospital. Thus, paving the way to superlative healthcare services! Conveniently located in South Chennai, 12 kilometers away from Central Railway Station & Egmore Railway Station and 13 kilometers away from the Domestic & International Airport, it gives an excellent accessibility to domestic and international patients. FMHL has 180 beds capacity During Q3FY13, net profit rose 86 percent to Rs2.6 crore on 7 percent higher sales of Rs26 crore. OPM and NPM stood at 16.6 percent and 10.0 percent against 14.7 percent and 5.9 percent respectively in Q3FY12.”
“During 9MFY13, net profit rose 66 percent to Rs8.3 crore on 5 percent higher sales of Rs74 crore. OPM and NPM stood at 20.2 percent and 11.2 percent against 13.9 percent and 7.1 percent respectively in 9MFY12. 9MFY13 EPS stands at Rs4.5 Vs Rs2.7 in 9MFY12. During FY12, consolidated net profit rose 44 percent to Rs7.8 crroe on 13 percent higher sales of Rs95 crore. EPS stood at Rs4.2. To conserve the resources, no dividend was declared.   India is poised to become the international medical tourism hub given its low cost of treatment as compared to international markets. But for this, it is imperative that the entire value chain of this industry, which includes hospitals, chemists, pharmacists, bio-technologists, scientists, doctors, government, infrastructure developers, medical technology and equipment providers work in synchronization with each other. It is also imperative for the private sector to streamline the business processes and devise cost-effective health care designs to provide affordable treatment to patients.”
“The government too is directing its focus toward this sector as is evident from the Rs58, 569 crore allocated to health, new national health mission and family welfare by the Government of India in the Budget 2013-14; and the tax holidays provided to set up healthcare institutions. It is now left for the public and the private healthcare sector to embrace new emerging trends and prepare the industry for yet another growth phase. FMHL is established as one of the largest corporate hospitals in Chennai providing qualitymulti super-specialty healthcare services. FMHL focuses on high-end quality healthcare services for reducing the average length of stay (ALOS) of the inpatients thereby increasing the average income per bed in use and thus improving the utilization rates.”
‘FMHL invested substantially towards promoting its brand both in India and abroad. With various tie-ups with international agencies, the company started showing significant growth in International revenues. Over the last two years FMHL's revenues have increased more than 60 percent and is now poised for further bettering these results with its expansion and acquisition plan if any going forward. At the current market price of Rs33, the share is trading at a P/E of 5.3x on FY13E and 4.7x on FY14E. We recommend BUY with a target price of Rs45 in the medium term,” says Sunidhi Securities research report.

Public holding more than 90% in Indian cos

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first published: Apr 18, 2013 11:06 am

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