ICICI Securities is bullish on Fortis Healthcare has recommended buy rating on the stock with a target price of Rs 160 in its research report dated August 15, 2020.
ICICI Securities research report on Fortis Healthcare
Fortis Healthcare (FHL) reported weak Q1FY21 performance as it was impacted by lockdown across the country. We expect the performance to gradually improve hereon as recovery was visible in June-July’20 in terms of occupancy and pathology tests. We believe normalisation is likely to happen in H2FY21. Revenue declined 46.8% YoY to Rs6.1bn with hospitals declining 46.5% and SRL (diagnostics) dropping 47.8%. This led to negative EBITDA margin of 17.0% (ISec: 12.0%) despite meaningful cost control on S,G&A front. We expect gradual operational improvement in terms of occupancy and ARPOB at hospitals with EBITDA margin expansion in hospitals and diagnostics led by cost rationalisation and operating leverage.
Outlook
Management has also taken various steps to reduce costs further by pruning personnel cost. Maintain BUY.
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