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Analyst Research Report Snapshot


Fortis Healthcare (FORH) - Qtr. Update - Dated - November 13, 2013




Axis Capital Limited


14 Nov 2013





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Fortis Healthcare (FHL) reported PAT of Rs 320 mn in Q2FY14 led by (1) tax write back of Rs 210 mn and (2) exceptional gain of Rs 137 mn. FHL has strengthened its balance sheet further by completing the divestment of Hoan My, Vietnam for USD 80 mn and selling its stake in Quality Healthcare, Hong Kong for USD 355 mn. As a result, FY14 debt: equity is expected at 0.3x (1.7x in FY13). With proceeds from sale of international assets being utilized to deleverage balance sheet, Fortis can now focus on growing the India healthcare business which now accounts for 95% of revenue. Lower interest outgo coupled with higher number of maturing beds and improving margin profile at SRL Diagnostics to drive turnaround in FY15E. Estimates and valuation We revise our estimates to factor in sale of international business and lower interest outgo. Our FY15E EPS stands at Rs 0.2 (Rs 1 earlier). 7% downside from CMP of Rs 100. Maintain HOLD with DCF-based target price to Rs 93. Regards, Kashyap Pujara (ED – Midcaps) Institutional Equity Research Axis Capital Ltd Tel: +91 22 4325 1146 Farzan Madon (VP – Midcaps) Institutional Equity Research Axis Capital Ltd Tel: +91 22 4325 1131

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