Buy Fortis Healthcare Ltd for the Target Rs. 1,140 by Choice Institutional Equities
Key Conference Call Highlights
Hospital Business
* Added nearly 800 beds in FY26 through a mix of brownfield expansion and inorganic acquisitions across key growth clusters.
* Focus specialties including oncology, neurosciences, cardiac sciences, gastroenterology, orthopaedics and renal sciences grew 18.9% YoY and contributed 62% of hospital revenues.
* The management stated that new hospitals, such as Manesar and Greater Noida, have started contributing positively to EBITDA after initial losses, improving the profitability profile of the network.
* International patient revenues saw some temporary moderation in Q4 due to geopolitical and travel-related disruption.
* Brownfield expansion at FMRI, Noida and Faridabad have demonstrated faster-than-expected ramp-up. The management indicated strong operating leverage benefits & immediate absorption of incremental capacity due to sustained high occupancy level.
Expansion Status
* Plans to add around 1,800 beds in the next four years through brownfield expansion initiatives.
* The management projects over 400–500 beds to be commissioned in FY27E, led by the new FMRI tower along with expansion at Noida, Manesar, Amritsar and Kolkata.
* The Shalimar Bagh expansion has been delayed due to approvalrelated issues, leading to some bed addition shifting from FY28 to FY29.
* Annual CapEx is guided at INR 9000 Mn, split approximately 60% towards maintenance and the remainder towards growth.
* The new FMRI tower is expected to be operationalised in a phased manner; the management is targeting an initial commissioning of ~100 beds in FY27E and retaining flexibility to accelerate addition depending on occupancy ramp-up.
Outlook
* The management guided for 15%+ revenue growth in the hospital business in FY27E.
* EBITDA margin expansion of ~150 bps is expected in FY27E for the hospital business, keeping the company on track for its 25% EBITDA margin target by FY28.
* Diagnostics business is targeting a double-digit revenue growth in FY27E, with the volume-value split projected to be approximately 70:30
* Diagnostics business margin is forecast to remain in the 23–24% range in FY27E.
* IHH Group CEO has indicated a plan to raise its stake to 50% & potentially inject ~INR 100 Bn in fresh equity, viewing India as the focus market.
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SEBI Registration no.: INZ 000160131
