Buy Fortis Healthcare Ltd For Target Rs. 775 - Axis Securities Ltd
Est. Vs. Actual for Q4FY25: Revenue: INLINE; EBITDA Margin: INLINE; PAT: MISS
Changes in Estimates post Q4FY25
FY26E/FY27E: Revenue: -0.7%/0.5%; EBITDA Abs: -0.7%/0.5%; ; PAT: -0.8%/0.8%
Recommendation Rationale
Strong Revenue Growth Driven by Hospitals Segment: The Fortis Hospital Segment reported revenue of Rs 1,701 Cr, up 14.2% YoY and 4.8% QoQ, supported by higher ARPOB and improved occupancy levels.
Stable ARPOB and Improved Occupancy : ARPOB stood at Rs 68,770, up 8.2% YoY, while occupancy improved to 69% (up 200 bps YoY), driven by a 7.2% YoY growth in occupied bed days. EBITDA margins remained flat at 22% YoY.
Agilus Diagnostics: Agilus reported revenue of Rs 306 Cr, with muted growth of 3.5% YoY, and an EBITDA of Rs 63 Cr, reflecting a 20.6% margin, up 440 bps YoY.
Sector Outlook: Positive
Company Outlook & Guidance : Fortis Healthcare remains focused on a profitable growth trajectory, leveraging brownfield expansions, operational efficiencies, and portfolio optimisation. The company targets 14-15% revenue growth in the hospital business, with ARPOB expected to grow at 5-6% YoY. Management reiterates its margin expansion guidance of 200 bps for FY26, also driven by higher occupancy and improvements in the specialty mix. Strategic initiatives such as the acquisition of the Fortis brand, expansion in key clusters (notably Punjab and NCR), and investment in advanced medical technology are expected to further strengthen Fortis’s market position.
Current Valuation: EV/EBITDA 24x for FY27E EBITDA (Earlier 27x /FY27E)
Current TP: Rs 775/share ( Earlier TP: Rs 860/share)
Recommendation: BUY
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SEBI Registration number is INZ000161633
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