Edelweiss maintains buy on Fortis Healthcare
Fortis
Healthcare (Fortis) rebounded with good Q1FY18 numbers post being
impacted by demonetisation in previous quarter. Revenue and EBITDA grew
by 3% and 38%, respectively. Price control on stents was absorbed and
business was back to normal. Management believes that growth trajectory
will improve to double digit in H2 and EBITDAC margin will expand to 16%
(13.3% in Q1FY18) by year end. Stock has corrected by 25% in the last 1
quarter hit by leverage issue at promoter's end. It is now trading at
13.4x FY19E EBITDAC versus average sector multiple of 18x. We believe
Fortis is at the cusp of unlocking significant value by demerging its
56% subsidiary SRL- can unlock around INR53/share.
Market Dashboard
