Prabhudas Lilladher's research report on Fortis Healthcare
Fortis Healthcare (FORH) Q2FY24 hospital EBITDA was in-line with our estimate, led by divestment of Arcot road unit and seasonality. Though hospital margins improved to some extent in Q2, we see further 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 EBITDA broadly remain unchanged. We expect 18% Pre IND AS EBITDA CAGR over FY23-25E. At CMP, stock is trading at 19x EV/EBITDA on FY25E, adjusted for Agilus stake.
Outlook
Maintain ‘Buy’ rating with revised TP of Rs 400/share (Rs. 365 earlier); valuing hospital and diagnostic segment at 20x EV/EBITDA on Sept 2025E. Resolution of legal issues and further monetization of non-profitable assets would be a key additional trigger for re-rating.
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