Prabhudas Lilladher's research report on Fortis Healthcare
Our FY24/25EEBIDTA estimates stands reduced by ~7% as we factor in lower margins across segments. Fortis Healthcare (FORH) Q4FY23 adjusted EBIDTA for one offs (Rs115mn) was 9% below our estimate, led by lower profitability in diagnostic segment. Though margins across segments in Q4 were below our estimates, we remain positive on margin improvement in hospital segment aided by 1) improving case and payor mix 2) cost rationalization initiatives and 3) traction in international patient’s footfall. We expect 17% Pre IND AS EBIDTA CAGR over FY23-25E. At CMP, stock is trading at 16.5x EV/EBIDTA on FY25E, adjusted for SRL stake.
Outlook
Maintain‘Buy’ rating with revised TP of Rs.330 (earlier Rs. 360) valuing at 18x EV/EBIDTA on FY25E. Resolution of legal issues and monetization of non-profitable assets would be a key additional trigger for re-rating.
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