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Fortis is the second largest hospital operator which operates
39 hospitals with 2,317 operating beds and 911 beds under
management as of September 2010.
• FOHE has demonstrated an ability to exploit market
opportunities; it acquired Escorts (a 90% stake in 2005),
Malar (a 50% stake in 2007) and Wockhardt (acquired in
December 2009)
• Over FY06-10, its revenue and operating profit recorded a
34% and a 57% CAGR, respectively.
• We expect FOHE to maintain double-digit revenue growth
over FY11-15. With higher revenue and an improving
EBITDA margin (we estimate 14% in FY11 to 18% in FY15)
and a rising net income margin (we estimate 5% in FY11 to
10% in FY15), we forecast a net income CAGR of 38% over
FY10-15.
• Shareholding: promoters – 82%
• Valuation: DCF based methodology using UBS’s VCAM tool
(assume WACC of 12.18% and terminal sales growth rate
of 5.8%).Implied FY13E PE of 34.4x
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