Prabhudas Lilladher's research report on Fortis Healthcare
Fortis Healthcare (FORH) Q1FY24 hospital EBIDTA was 6% below our estimate, led by certain one offs (Rs70mn) and lower margins. Though hospital margins were lower in Q1, we remain positive on margin improvement in hospital segment aided by 1) improving case and payor mix 2) cost rationalization initiatives and 3) divestment of non-profitable assets. Our FY24E and FY25E EBIDTA broadly remain unchanged. We expect 18% Pre IND AS EBIDTA CAGR over FY23-25E. At CMP, stock is trading at 19x EV/EBIDTA on FY25E, adjusted for ADL (SRL).
Outlook
Maintain ‘Buy’ rating and TP of Rs.365; valuing hospital segment at 20x and Diagnostic business at 18x EV/EBIDTA on FY25E. Resolution of legal issues and further monetization of non-profitable assets would be a key additional trigger for re-rating.
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