Fortis Healthcare jumps on plan to sell stake in Hong Kong unit

Fortis Healthcare jumped 4.46% to Rs 109 at 9:56 IST on BSE after the company said it has decided to sell its stake in Quality Healthcare in Hong Kong to Bupa for $355 million.

The announcement was made after market hours on Monday, 14 October 2013.

Meanwhile, the BSE Sensex was up 123.90 points, or 0.60%, to 20,731.44.

On BSE, 1.09 lakh shares were traded in the counter compared with average volume of 74,226 shares in the past one quarter.

The stock hit a high of Rs 111.25 and a low of Rs 108 so far during the day. The stock hit a 52-week high of Rs 119.50 on 17 December 2012. The stock hit a 52-week low of Rs 84 on 27 June 2013.

The stock had outperformed the market over the past one month till 14 October 2013, rising 7.03% compared with the Sensex's 4.43% rise. The scrip had also outperformed the market in past one quarter, rising 4.77% as against Sensex's 3.25% rise.

The mid-cap company has an equity capital of Rs 462.78 crore. Face value per share is Rs 10.

Fortis Healthcare said that its subsidiary, Fortis Healthcare International, has decided to sell its 100% stake in Altai Investments, the holding company for Quality Healthcare (QH) in Hong Kong, to Bupa for $355 million.

The offer price is reflective of the value and efficiencies added through improved operations and the introduction of new and specialised medical centres while QH has been a part of the Fortis group. The deal is expected to be completed in October 2013, Fortis Healthcare said in a statement.

Malvinder Singh, Executive Chairman, and Shivinder Singh, Executive Vice Chairman, Fortis Healthcare, said, "The divestment clearly aligns our business with our stated priorities. We have taken a strategic decision to intensify our focus on our core hospital and diagnostic business in India with a clear path to profitability. The divestment also enables us to further strengthen our balance sheet and substantially improve our net debt equity ratio, creating further room for growth."

Fortis Healthcare said it has demonstrated remarkable fiscal prudence and slashed its debt in the preceding 12 months. Post QH, the company's net debt equity position is expected to be less than 0.3x down from 1.6x as on 30 September 2012. The company said it continues to evaluate its portfolio of assets to ensure the right alignment and strategic fit.

In the current year, Fortis will add over 1,000 beds from Greenfield projects in India. In May 2013, it launched its flagship, the Fortis Memorial Research Institute in Gurgaon. Two more projects, one each in Ludhiana and Chennai (Arcot Road) are nearing completion and will be commissioned in the next few months.

Following the QH divestment, the India revenue will account for nearly 95% of the company's total revenue. With the addition of new capacity and performance improvements, the company expects its India business to exhibit a robust operating performance going forward.

On a consolidated basis, Fortis Healthcare reported a net loss of Rs 221.30 crore in Q1 June 2013, higher than a net loss of Rs 60.42 crore in Q1 June 2012. Net sales rose 7.7% to Rs 1503.63 crore in Q1 June 2013 over Q1 June 2012.

Fortis Healthcare is a leading integrated healthcare delivery service provider in India. The healthcare verticals of the company primarily comprise hospitals, diagnostics and day care speciality. Currently, the company operates its healthcare delivery services in India, Singapore, Dubai, Mauritius and Sri Lanka with 65 healthcare facilities (including projects under development), over 10,000 potential beds, over 240 diagnostic centres and a team strength of more than 17,000 people.

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