Fortis Healthcare gains on Bengaluru expansion; JM Financial upgrades stock

JM Financial has set a target price of ₹1,093 on Fortis Healthcare stock, a potential upside of 22.7 per cent from Friday's closing price

Fortis Healthcare shares rose over 2 per cent after JM Financial upgraded the stock to 'Buy', citing incremental upside from its recent Bengaluru acquisition and valuation comfort as the stock corrected about 20 per cent from recent highs.

 

JM Financial has set a target price of ₹1,093 on the stock, a potential upside of 22.7 per cent from Friday's closing price

 

Fortis has entered into definitive agreements to acquire TMI Healthcare, which owns the 125-bed People Tree Hospital, along with the underlying hospital land and an adjacent land parcel, for a total consideration of around ₹430 crore, including debt. 

 

JM Financial said Fortis' acquisition of People Tree Hospital in Yeshwanthpur, Bengaluru, strengthens its presence in a supply-constrained micro-market with favourable demand drivers.   ALSO READ | Antique sees stable FY26 for KPR Mill; garment, ethanol to drive growth 

People Tree Hospital reported revenue of around ₹75 crore in the financial year 2024-25 (FY25). JM Financial noted that Fortis plans incremental capital expenditure of ₹410 crore over the next three years to expand capacity at the facility to 300-350 beds. With the second tower expected to become operational by FY29 or FY30, the asset could generate revenue of around ₹600 crore at margins of 25-27 per cent by FY31 or FY32.

 

JM Financial said Fortis is currently trading at 25.6 times and 20.6 times enterprise value to Ebitda on FY27 and FY28 estimates, respectively. Despite the recent correction from highs of ₹1,105 to around ₹891, the brokerage sees no deterioration in the underlying outlook. It expects Fortis to benefit from brownfield expansion, improvement in pharmacy profitability and the Bengaluru acquisition.

 

The brokerage projects Fortis to deliver revenue and Ebitda compound annual growth rates of 17 per cent and 26 per cent, respectively, over the FY25-28 period. It also expects Ebitda per occupied bed to improve from around ₹50 lakh in FY24-25 to about ₹70 lakh by FY27-28, comparable to Max Healthcare, leading to cumulative free cash flow generation of over ₹4,000 crore over the next three years. 

Geojit Financial Services said the company is targeting the addition of 400-500 beds during the full year, led by capacity expansion at its Noida and Jalandhar facilities. Fortis is also aiming to sustain an Ebitda margin of around 25 per cent in the hospital business over the next couple of years, supported by operating leverage and a steady contribution from international patients.

 

Citing improved operating performance and growth visibility, Geojit upgraded the stock to 'Buy' from 'Hold' and raised its target price to ₹1,030.

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Fortis Healthcare share price history

 

The lender's stock rose as much as 2.2 per cent during the day to ₹911.4 per share. The Fortis Healthcare stock pared gains to trade 2 per cent higher at ₹909 apiece, compared to a 0.67 per cent advance in Nifty 50 as of 10:56 AM. 

 

The counter has risen 10.5 per cent this year, compared to a 10.5 per cent advance in the benchmark Nifty 50. Fortis Healthcare has a total market capitalisation of ₹68,637.02 crore.   ===== 

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