Prabhudas Lilladher's research report on Fortis Healthcare
Fortis Healthcare (FORH) Q4FY24 EBITDA was 14% above our estimates aided by higher margins in hospital segment. Though hospital margins saw 170 bps YoY improvement in FY24, we see further margin improvement in hospital segment aided by 1) improving case and payor mix 2) cost rationalization initiatives and 3) new brownfield bed addition. Our FY25E and FY26E hospital EBITDA stands increased by 4-5%. We expect 21% EBITDA CAGR over FY24-26E.
Outlook
At CMP, stock is trading at 20x EV/EBITDA on FY26E, adjusted for Agilus stake. Maintain ‘Buy’ rating with revised TP of Rs 515/share (Rs. 480 earlier); valuing hospital segment at 23x and diagnostic at 18x EV/EBITDA on FY26E. Resolution of legal issues and monetization of PE stake in Agilus to third party would be a key additional trigger for re-rating.
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