>Fortis (ICICI Direct)

Going strong : Fortis Healthcare declared its consolidated results for Q3FY09 with robust growth of over 400% in its operating profits. This robust growth in operating profit was mainly lead by a rise in its total bed capacity, improvement in average revenue per occupied bed (ARPOB) and better cost control management. Due to better operating performance, the company reported positive net profit for the quarter, despite a decline of 64% YoY in its other income.

Highlight of the quarter : Net sales rose 32.5% YoY to Rs 161.1 crore on account of a rise in number of facilities and improvement in average revenue per occupied bed (ARPOB) across its various hospitals. On an individual performance basis, Escorts (Delhi) recorded highest revenue of Rs 146.4 crore as against Rs 129.8 crore last year on a nine monthly basis, whereas on percentage terms Escorts (Jaipur) recorded highest growth of 187.5% with total revenues of Rs 27.6 crore over a period of nine months. The company also adopted various cost control measures. As a result its operating profits for the quarter recorded over 400% YoY growth. Its net profit for the quarter stood at Rs 5.1 crore compared to a loss of Rs 6.8 crore last year. The EBITDA margin for the current quarter was 15.4% as against last year’s EBITDA margin of 3.9%.

Valuations: At the current market price of Rs 65.5, the stock is trading at a level of 20.6x and 15.1x its FY09E and FY10E EV/EBITDA, respectively. With consistent strong growth at operating levels, we maintain our target price of Rs 92 and rate the stock as OUTPERFORMER. The target price was arrived at by using the DCF methodology.

To see full report: FORTIS