5 hrs ago
Nomura Maintains Neutral Fortis Healthcare Rating Amid Growth Concerns
Nomura is a financial company that studies Fortis Healthcare’s stock.
It kept its rating at neutral, meaning it does not strongly recommend buying or selling the shares.
Nomura set a price goal of ₹1,030 per share.
It said much of Fortis’s expected growth may already be reflected in the stock price.
The brokerage also worries that costs and pressure from insurers could limit profit growth.
Fortis said a court-ordered forensic audit is investigative and will not affect its operations or expansion plans.
Fortis reported higher revenue and slightly higher profit in the quarter ended June 30, 2026.
IHH Healthcare also said it plans to increase its ownership of Fortis and eventually combine another Indian hospital business with it.
Nomura retained its neutral rating on Fortis Healthcare with a target price of ₹1,030 per share.
The brokerage said growth is already priced in and EBITDA margin expansion may face pressure from ESOP charges.
Nomura cited insurers’ bargaining power, possible cost-control regulations, wage inflation and high capital intensity as valuation risks.
Fortis Healthcare reported Q1 FY27 consolidated revenue of ₹2,545 crore and profit after tax of ₹273 crore.
IHH Healthcare said it plans to raise its Fortis stake to 51% from 31.2% and eventually merge Gleneagles India with Fortis.
- Who
- Nomura, Fortis Healthcare, IHH Healthcare and the Delhi High Court are involved in the developments discussed.
- What
- Nomura retained a neutral rating and a ₹1,030 target price for Fortis Healthcare while reviewing its results, audit developments and ownership plans.
- Where
- The developments concern Fortis Healthcare and IHH Healthcare’s hospital operations in India.
- When
- The reported results cover the quarter ended June 30, 2026; the share performance figures include periods through 2026.
- Why
- Nomura cited valuation concerns, possible margin pressure, insurer bargaining power, regulatory risks, wage inflation and Fortis’s high capital intensity.
Nomura’s Caution
Management and IHH’s Confidence
Growth and valuation
Nomura’s Caution
Nomura said growth is priced in and maintained a conservative valuation multiple based on 25x FY28-29F average EBITDA.
Management and IHH’s Confidence
Fortis management said its growth and expansion plans remain intact, while IHH’s planned ownership increase aligns with current market expectations.
Forensic audit
Nomura’s Caution
Nomura highlighted the Delhi High Court’s order for a forensic audit as a development requiring investor attention, although it described management’s position on the audit.
Management and IHH’s Confidence
Fortis management said the audit is investigative, business operations are fully insulated and it is unlikely to produce a negative outcome.
Future profitability
Nomura’s Caution
Nomura warned of ESOP charges, insurers’ growing bargaining strength, potential cost-control regulations, wage inflation and high capital intensity.
Management and IHH’s Confidence
Fortis reported year-on-year growth in both quarterly revenue and profit, while management maintained confidence in its business plans.
Key facts
- Nomura rating
- Neutral
- Target price
- ₹1,030 per share
- Q1 FY27 revenue
- ₹2,545 crore, up 17.5% year on year
- Q1 FY27 profit after tax
- ₹273 crore, up 2.3% year on year
- Hospital business revenue
- ₹2,187 crore in Q1 FY27
- IHH current Fortis stake
- 31.2%
- IHH proposed Fortis stake
- 51% over the next 3-5 years
- Recent share performance
- Down 4.61% in one week, 6.04% in one month and 3.08% year to date
Quotes
Nomura
Brokerage firm covering Fortis Healthcare
“We believe that growth is priced in and EBITDA margin expansion faces headwind from ESOP charges. We remain conservative on the valuation multiple given insurers’ growing bargaining strength, potential cost-control regulations, wage inflation pressures for both employees and doctors, and the high capital intensity of the business.”
livemint.com
Sources
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