Fortis Healthcare share price gains 2%: up more than 50% in a year. Here's why
Also Read-Jefferies says weakness likely to continue in specialty chemicals; check its ratings on SRF, PI Industries and more Analysts remain positive on the expected rise in Average revenues per operating bed (ARPOB). Analysts at Nomura Research have recently increased our ARPOB CAGR (compound annual growth rate) assumption over FY25-30 from 4% to 5.8%, factoring in the expectation of sustained improvement in case mix and payor mix along with price hikes. Also, the newer brownfield capacity is expected to come up over next 4 years in facilities with relatively high ARPOBs (15% higher than the company average on a blended basis, in our view) which should support the ARPOB improvement, they said Fortis Hospital should see improvement in its earnings before interest tax depreciation and amortisation (Ebitda) and margins also because of these reasons.
Fortis has been working to turn around its low margin. loss-making facilities. Analysts at Nomura estimate that six sub-optimal facilities in Fortis network had an adverse impact of 300bps in FY23.
Out of these, divestment of two facilities (Arcot Road and Malar) has already been announced in line with the company’s strategy of focusing on its key geographies, sais analysts at Nomura. 100 basis points make a per cent. Also Read- MRPL stock soars over 17.5%, sets new record high after 16 years; here's why As focus on higher margin facilities remains a positive, the operating leverage through brownfield expansion; and improvement in case mix and payor mix also will support margins.
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