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In Q3FY24, Fortis's performance fell below our expectations across various metrics. The revenue stood at INR 16.7bn, reflecting a 7.7% YoY increase but a 5.1% QoQ decrease. Within the revenue, the hospital business contributed INR 13.8bn, showing a 9.6% YoY growth but a 4.4% QoQ decline, while diagnostics contributed a net revenue of INR 2.9bn. ARPOB/day remained relatively unchanged sequentially and grew by 10.6% YoY, reaching INR 61,096. The occupancy rate for the quarter was 64%, down from 66% the previous year. EBITDA was INR 2.8bn, reflecting a 2.7% YoY increase but a 14% QoQ decrease. The margin was 16.9%, down by 82bps YoY and 175bps QoQ, primarily due to a decline in the diagnostic business margin (11.4% in Q3FY24 compared to 19.6% in Q2FY24). The hospital business margin came in at 18.0%, slightly lower than the 18.4% reported in Q2FY24.

? Robust revenue growth in Hospital Business with Specialty expansion: The Hospital Business recorded a 9.6% YoY revenue growth, attributed to a rise in ARPOB reaching INR 22.3mn (+10.6% YoY). Focused medical specialties, including oncology, orthopedics, renal sciences, cardiac sciences, neurosciences, and gastroenterology, accounted for 61.4% of Q3FY24 revenue, up from 60.9% in Q3FY23. Specific specialties like gastroenterology, neurosciences, and oncology reported impressive growth rates of 20%, 13%, and 12%, respectively, compared to the corresponding quarter last year. International Patient revenues remained steady at INR 1,130mn, contributing 7.7% to overall hospital revenue. The Surgical and Non-Surgical revenue ratio stood at 58:42, a slight shift from 59:41 last year. Hospital operating EBITDA reached INR 2,508mn with an 18% margin, marking an increase in its contribution to 88%, up from 76% last year. ? Ludhiana Facility Inauguration and Bed Expansion Plans: The company inaugurated a new 70-bed facility in Ludhiana, the second in the city and fourth in Punjab, contributing to a total bed capacity of 772 in the region. Further expansion plans include adding 250 beds in FY24 and approximately 2,200 beds from FY23 to FY28. Additional beds will be incrementally added to key facilities, fostering operating leverage and margin expansion, with a brownfield approach for Shalimar Bagh, FMRI, and Noida expansions, while the Manesar facility represents a ramp-up of an existing non-operational hospital. ? EBITDA Margin Guidance and Occupancy Trends: The management maintains its EBITDA margin guidance of 20% for FY24, driven by occupancy improvement. They aim to achieve a 25% EBITDA margin in 3-4 years through bed expansion. Jan-Feb occupancy trends are healthy, and the management expects 70% occupancy levels in Q4 and the next year

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