Buy Fortis Healthcare; target of Rs 785: Prabhudas Lilladher

Prabhudas Lilladher's research report on Fortis Healthcare

Fortis Healthcare’s (FORH) Q4FY25 EBITDA at Rs4.36bn; up 14% YoY was in line with our estimates. Though hospital margins improved by 170bps/190bps YoY in FY24/FY25, we see further scope for improvement aided by 1) improving case and payor mix, 2) cost rationalization initiatives including divestment of Richmond unit in Bangalore, ramp up of Manesar unit and 3) new brownfield bed additions. Fortis consolidated 89.2% stake in Agilus in Jan’25. We expect margins and revenue growth to further pick up from FY26 in Agilus. Our FY26E and FY27E EBITDA stands marginally increased by 1-2%.

Outlook

We expect EBITDA to clock 21% CAGR over FY25-27E. At CMP, the stock is trading at 23x EV/EBITDA on FY27E, adjusted for Agilus stake. Maintain ‘Buy’ rating with revised TP of Rs785/share, valuing the hospital segment at 27x and diagnostic at 25x EV/EBITDA on FY27E.

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