Fortis Health: Book profit with 30% gains, says Sharekhan

Sharekhan's report on Fortis Healthcare

Fortis Healthcare, a leading integrated healthcare service provider in India, has appreciated by almost 30% since we published our Viewpoint report on the company on September 12, 2014. The good performance of the stock can be attributed to an improving operating performance of its Indian operations (which contribute about 98% of the consolidated revenues), primarily its core hospital business.

Our positive stance was based on the signs of an improving outlook for the Indian operations and the benefits of the efforts taken to deleverage the balance sheet by hiving off the non-core assets (including the international businesses). Some of these steps have materialised with its net debt reducing to Rs1,301 crore. Consequently, the stock has got re-rated accordingly.

After the recent rally the share price of Fortis Healthcare captures most of the positives and the upside could be limited in the near to medium term. Thus, we advise investors to Book profit and look for better entry points even for investment with a slightly longer term horizon.

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