Buy Fortis Healthcare; target of Rs 185: Motilal Oswal

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Motilal Oswal's research report on Fortis Healthcare

Fortis Healthcare (FORH) reported 2QFY18/3QFY18 revenue of INR12b (flat YoY)/INR11.2b (-1.1% YoY), with EBIDTA margin of 8.9%/4.6%. Hospital business revenue came in at INR9.7b (-0.6% YoY)/INR9b (-0.9% YoY) for 2QFY18/3QFY18, with EBITDA margin of 8.5%/5.5%. SRL reported revenue of INR2.2b (+5.2% YoY)/INR2.1b (+10% YoY), with EBITDA margin of 23.2%/18.4%. 2Q numbers were in line, but 3Q numbers missed our expectations. FORH reported a loss of INR236m/INR191m in 2Q/3QFY18.

Outlook

We have valued the hospital and diagnostic business based on 20x and 18x 1HFY20E EV/EBITDA, respectively. We cut EBITDA by 26%/9% for FY19/20E as we build in slower margin ramp-up.For all recommendations report, click here

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