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Fortis Healthcare -Meets expectation…
Fortis Healthcare’s Q3FY11 revenues grew 59.8% YoY to | 371.4 crore
and remained broadly in line with our estimates (I-direct estimate: |
380.1 crore). This robust growth was mainly led by incremental
revenues of | 103 crore from newly acquired hospitals. Thus, organic
growth stood at 23% YoY and also remained above our expectations.
Average occupancy levels improved to 76% as against 74% last year.
However, operating margins declined by 80 bps YoY due to the recent
launch of three new greenfield hospitals in Delhi, Kolkata and Mulund
(Mumbai). Interest costs continue to remain higher compared to last
year. However, it declined sharply QoQ on reduction in debt, post
Parkway stake sale. Other income also rose threefold YoY to | 36.9
crore on account of deployment of surplus funds. As a result, the
company reported net profit growth of over 58% YoY to | 34.5 core.
Organic growth continues to remain healthy
Barring revenues from newly acquired hospitals, the company has been
able to post growth of 23% in their revenues led by higher occupancy (up
200 bps YoY). Occupancies and revenues in network hospitals, especially
Northern India, witnessed higher average growth of 26.7% compared to
last year.
Margin declines on new launch, rise in other income leads PAT growth
Operating margins have been impacted by 80 bps YoY to 14.5%, on
account of incurring of start-up costs on launch of three major hospitals in
Delhi, Kolkata and Mulund. On a like-to-like basis, it improved to 16.4%.
Valuations
At the CMP of | 147, the stock is trading at levels of 25.6x and 20.0x its
FY11E and FY12E EV/EBITDA, respectively. Valuations are looking
stretched but considering the company’s constant growth focus and
strong management team supports our positive outlook on the company.
We maintain our BUY rating on the stock with a 12 month target price of |
165 (based on the DCF model).
Apart from increase in average occupancy levels, the growth in revenues
was also fuelled by additional revenue inflow of | 103 crore from newly
acquired hospitals. However, operating margins for the quarter declined
by 80 bps to 14.5% on account of incurring of start-up costs on the
launch of three major hospitals at Delhi, Kolkata and Mulund.
• Revenue for the quarter grew 59.8% YoY on account of
improvement in operational parameters and inorganic
expansions. However, operating profits grew 51.4% YoY on
account of 80 bps margin contractions
o For the quarter ended Q3FY11, average occupancy grew by
200 bps to 76% compared to last year and ALOS recorded
marginal increase of 3%. Average revenue per bed (ARPOB)
declined from | 86 lakh per annum to | 81 lakh YoY
o This quarter’s revenues also include revenues of ~| 103 crore
from newly acquired hospitals vs. | 35.2 crore in Q3FY10
• Operating margins for the quarter declined 80 bps to 13.9% on
account of a sharp rise in operating costs, which increased over
125% compared to last year
Future plans
Fortis has been expanding aggressively through greenfield projects,
acquisitions and management contracts. It completed the 350 bedded
greenfield hospital project at Shalimar Bagh and commenced operations
from September 2010. Its 414 bedded project at Kolkata also commenced
OPD and IPD services from September 2010. In addition, its Mulund
facility launched a state-of-the-art oncology block. The details of the other
ongoing hospital projects are mentioned herein below.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Fortis Healthcare -Meets expectation…
Fortis Healthcare’s Q3FY11 revenues grew 59.8% YoY to | 371.4 crore
and remained broadly in line with our estimates (I-direct estimate: |
380.1 crore). This robust growth was mainly led by incremental
revenues of | 103 crore from newly acquired hospitals. Thus, organic
growth stood at 23% YoY and also remained above our expectations.
Average occupancy levels improved to 76% as against 74% last year.
However, operating margins declined by 80 bps YoY due to the recent
launch of three new greenfield hospitals in Delhi, Kolkata and Mulund
(Mumbai). Interest costs continue to remain higher compared to last
year. However, it declined sharply QoQ on reduction in debt, post
Parkway stake sale. Other income also rose threefold YoY to | 36.9
crore on account of deployment of surplus funds. As a result, the
company reported net profit growth of over 58% YoY to | 34.5 core.
Organic growth continues to remain healthy
Barring revenues from newly acquired hospitals, the company has been
able to post growth of 23% in their revenues led by higher occupancy (up
200 bps YoY). Occupancies and revenues in network hospitals, especially
Northern India, witnessed higher average growth of 26.7% compared to
last year.
Margin declines on new launch, rise in other income leads PAT growth
Operating margins have been impacted by 80 bps YoY to 14.5%, on
account of incurring of start-up costs on launch of three major hospitals in
Delhi, Kolkata and Mulund. On a like-to-like basis, it improved to 16.4%.
Valuations
At the CMP of | 147, the stock is trading at levels of 25.6x and 20.0x its
FY11E and FY12E EV/EBITDA, respectively. Valuations are looking
stretched but considering the company’s constant growth focus and
strong management team supports our positive outlook on the company.
We maintain our BUY rating on the stock with a 12 month target price of |
165 (based on the DCF model).
Apart from increase in average occupancy levels, the growth in revenues
was also fuelled by additional revenue inflow of | 103 crore from newly
acquired hospitals. However, operating margins for the quarter declined
by 80 bps to 14.5% on account of incurring of start-up costs on the
launch of three major hospitals at Delhi, Kolkata and Mulund.
• Revenue for the quarter grew 59.8% YoY on account of
improvement in operational parameters and inorganic
expansions. However, operating profits grew 51.4% YoY on
account of 80 bps margin contractions
o For the quarter ended Q3FY11, average occupancy grew by
200 bps to 76% compared to last year and ALOS recorded
marginal increase of 3%. Average revenue per bed (ARPOB)
declined from | 86 lakh per annum to | 81 lakh YoY
o This quarter’s revenues also include revenues of ~| 103 crore
from newly acquired hospitals vs. | 35.2 crore in Q3FY10
• Operating margins for the quarter declined 80 bps to 13.9% on
account of a sharp rise in operating costs, which increased over
125% compared to last year
Future plans
Fortis has been expanding aggressively through greenfield projects,
acquisitions and management contracts. It completed the 350 bedded
greenfield hospital project at Shalimar Bagh and commenced operations
from September 2010. Its 414 bedded project at Kolkata also commenced
OPD and IPD services from September 2010. In addition, its Mulund
facility launched a state-of-the-art oncology block. The details of the other
ongoing hospital projects are mentioned herein below.
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