Buy Fortis Hospitals; target of Rs 940: Motilal Oswal

Moneycontrol • 2 days ago

Original source

Key Investment Pillars

  • Fortis Healthcare's hospital segment revenue grew 18.8% YoY, driven by higher patient volumes and a 6.1% improvement in ARPP, with occupancy improving to 72% in 2QFY27.
  • The company is expanding its diagnostic network, with the addition of 300 customer touchpoints in 2QFY27, and a favorable shift in the B2C:B2B revenue mix to 54:46.
  • Fortis Healthcare has guided for a 12-13% growth in diagnostic revenue for FY27, with a potential acceleration to mid-teens growth in subsequent quarters.
  • The company aspires to increase its bed capacity to ~12,000 over the next 3-5 years, driven by brownfield expansion, O&M arrangements, and inorganic opportunities.

Thesis Validation Checklist

  • Investors should watch for occupancy improvement at newly commissioned facilities, and the impact of margin caps on oncology drugs on the company's profitability.
  • The success of the company's diagnostic expansion, and the growth of its focus specialties, including Oncology, Neuro Sciences, and Cardiac Sciences, will be key to the investment thesis.
  • Any updates on the company's plans to increase its bed capacity, and the progress of its brownfield expansion and inorganic growth initiatives, will be important to monitor.