Rakesh Jhunjhunwala portfolio stock Forts Healthcare has risen more than 8% in the last one month and is extending its gains on Wednesday morning. The stock was trading at Rs 270 per share and analysts believe there is more upside potential in the healthcare stock. Analysts remain bullish despite the fact that Fortis Healthcare reported a 69% decline in net profit in the April-June quarter. Big bull Rakesh Jhunjhunwala owns a stake in Fortis Healthcare and has recently talked about how he is bullish on hospital stocks.
Fortis Healthcare reported a net profit of Rs 134 crore in the fiscal first quarter, down from Rs 431 crore a year ago. However, last year’s earnings included an exceptional gain of Rs 306 crore. Revenue in the quarter stood at Rs 1,488 crore as compared with Rs 1,410 crore in the year-ago period. Analysts believe Fortis Healthcare’s results were strong and in line with the estimates pinned.
Target price: Rs 325 per share
“Steadily improving occupancy and specialty mix validate Fortis’s execution capabilities. This is despite nine hospitals operating at <15% margin, implying room for improvement,” said analysts at Edelweiss. Analysts believe that there are enough levers in place that can push the company’s growth to double digits. Occupancy above 70%, improvement in surgical mix, nine hospitals operating at sub-par margins that offer room for a turnaround; and brownfield expansion — 1,500 beds over next four years funded by internal accruals are seen as triggers for the stock. “The focus on profitable growth, improving specialty mix and calibrated expansion augurs well for Fortis,” they added. The target price projects 20% from today’s levels.
Prabhudas Lilladher: BUY
Target price: Rs 330 per share
Analysts at Prabhudas Lilladher are bullish on the stock and expect margin improvement across segments given improving case mix in hospital segment with cost rationalization initiatives, traction in international patient’s footfall, and increase in test volume on network expansion in diagnostics business. “We expect 14% Pre Ind as EBITDA CAGR over FY22-24E. At CMP, stock is trading at 17x EV/EBITDA on FY24E, adjusted for SRL stake. We broadly maintain our estimates and recommend ‘Buy’ rating with TP of Rs 330,” they added. The target price translates to 22% upside.
Ace investor Rakesh Jhunjhunwala owns a 4.23% stake in the company with 3,19,50,000 equity shares. The value of the big bull’s stake in the company at Wednesday’s price would be Rs 862.65 crore. Earlier this week, Rakesh Jhunjhunwala said that he is bullish on PSU banks as well as the healthcare sector.