Buy Fortis Healthcare; target of Rs 360: Prabhudas Lilladher

Prabhudas Lilladher's research report on Fortis Healthcare

Fortis Healthcare (FORH) reported an in-line quarter with EBITDA decline of 9% YoY (down 3% QoQ) to Rs.2.8bn. We remain positive on the company and expect margin improvement across segments given 1) improving case mix in hospital segment with cost rationalization initiatives 2) traction in international patient’s footfall and 3) increase in test volume on network expansion in diagnostics business. We expect 19% Pre IND AS EBITDA CAGR over FY23-25E. At CMP, stock is trading at 15x EV/EBITDA on FY25E, adjusted for SRL stake.

Outlook

Maintain ‘Buy’ rating with TP of Rs.360 (unchanged) valuing hospital at 18x EV/EBIDTA and diagnostic at 20x EV/EBIDTA on FY25E. Resolution of legal issues would be a key additional trigger for re-rating.

For all recommendations report, click here