Nomura downgrades Fortis Healthcare to neutral, stock falls 4%

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26 Aug, 2025 12:21

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Shares of Fortis Healthcare were under pressure on Friday after Nomura downgraded the stock to neutral, making investors cautious. The stock fell around 4 percent intraday on the back of this development.

The brokerage house highlighted how the revenue growth has remained muted over the past two years. There is a industry slowdown in both hospitals and diagnostics segments.

“With increased competition and pricing pressure, we reduce our long-term expectations for growth and margins. We now expect long-term EBITDA margins for SRL at 25% vs 30% earlier,” the brokerage house said in its report.

In the hospitals segment, Nomura said that the growth in the previous fiscal at 10 percent was below its estimates and management guidance suggests only a marginal acceleration in FY18F.

Having said that, it is positive on brownfield capacity additions, which could drive growth over the next three years.

Due to high operating leverage, we lower our EBITDA estimates by 20%/25%, respectively.

The brokerage house also lowered its earnings before interest, taxes, depreciation and amortisation estimates by 20/25 percent respectively on the back of high operating leverage.

The stock has been under pressure recently on the back of its selling plans hitting a roadblock.

The scrip plunged over 14 percent intraday last on June 23, 2017 on reports of Malaysia-based Integrated Healthcare Holdings (IHH) pulling out of controlling stake purchase talks from Fortis Healthcare, Malar Hospitals and SRL Diagnostics.

IHH, according to a report in The Economic Times, had been in exclusive negotiations with the Singh brothers, Malvinder and Shivinder, to acquire a controlling interest in Fortis Healthcare and Fortis Malar and SRL Diagnostics.

The share, most recently though, had rallied on buzz of listing of its diagnostics arm. "SRL Diagnostics, India’s largest diagnostic chain, is likely to be listed on Indian bourses by August as part of the scheme of demerger from its parent Fortis Healthcare," The Economic Times said quoting officials aware of the development.

The stock fell nearly 19 percent in the past one month, while its three-day loss stood at over 3 percent. At 09:25 hrs, Fortis Healthcare was quoting at Rs 159.75, down Rs 4.70, or 2.86 percent on the BSE. It touched a 52-week low of Rs 157.60.