FORTIS - Fortis Healthcare Ltd Share Price

Fortis Healthcare Limited's management provided an optimistic outlook following the strong performance in Q1 FY26. Dr. Ashutosh Raghuvanshi, CEO, highlighted a consolidated revenue of INR 2,167 crores, marking a 16.6% increase compared to the same quarter last year, driven predominantly by the hospital business, which generated INR 1,838 crores (an 18.6% growth). The operating EBITDA rose significantly by 43.2% to INR 491 crores, achieving a margin of 22.6% compared to 18.4% in Q1 FY25. The profit after tax before exceptional items also surged by 46.2% to INR 254 crores.

Management has ambitious plans, including the addition of approximately 900 beds in FY26, operationalizing about 50% of these beds within the year. The acquisition of Shrimann Superspecialty Hospital added 228 beds to their network, expanding their presence in Punjab to over 1,000 beds. They are also set to manage operations for Gleneagles India, which will cover approximately 700 beds across five hospitals and a clinic, generating a monthly service fee of 3% of net revenue.

The ARPOB experienced a 10.2% increase, reaching INR 2.65 crores, attributed to a favorable specialty mix, particularly in oncology, which grew by 28%. The company reported a noteworthy 21% growth in international business revenue, contributing 8% of total revenue. Furthermore, the diagnostic business saw a gross revenue rise of 7.4% to INR 369 crores, with an operating EBITDA margin of 23%.

Overall, management emphasized a clear focus on growth through strategic expansion, enhancing service quality, and leveraging operational synergies, positioning Fortis for a robust trajectory moving forward.

1. Question: "The first question I have on the Hospital performance, particularly the 5 hospitals: FMRI, Mohali, BG Road, Mulund and Jaipur, have seen a sharp uptick on the sequential numbers. What is the occupancy right now?"

   Answer: "Jaipur is operating at around 65% occupancy and is recovering. FMRI is doing well at 80% occupancy. BG Road struggles at 56% to 57%, but has healthy margins. Mulund is below 60% but has above 20% EBITDA margin. We expect occupancy to improve in BG Road and Mulund."

2. Question: "On your profitability metrics, can you highlight which unit has moved up in the 25% EBITDA margin bucket?"

   Answer: "Ludhiana has moved up to above 20% margin, while FMRI and Anandpur are now above 25%. This improvement reflects overall operational efficiency and strategic enhancements across our network."

3. Question: "Do you expect your diagnostics segment to achieve your full year guidance of 22% margins?"

   Answer: "Yes, we anticipate margins to remain in the range of 22% to 23% for the full year. The second quarter typically performs well, but a slight dip is expected in Q3, followed by normalization in Q4, maintaining our annual guidance."

4. Question: "What is the game plan regarding the Gleneagles O&M contract, especially given that it includes non-core facilities?"

   Answer: "Excluding Mumbai initially, we see Gleneagles as a new cluster for Fortis. Our aim is to build momentum in these markets by leveraging existing clinical talent and creating synergies that will enhance operational performance and profitability."

5. Question: "Given your guidance for 200 basis points margin improvement, could there be a positive surprise this year?"

   Answer: "Although we're maintaining our margin guidance, our strong first quarter performance suggests continued momentum. The case mix and new facilities will contribute positively, but we remain cautious in our outlook based on past trends."

6. Question: "What are the current occupancy rates for Noida and Faridabad?"

   Answer: "Noida's occupancy is at 76% post 60-bed addition, while Faridabad exceeds 80% occupancy. These figures indicate solid performance in both facilities despite their recent expansions."

7. Question: "Can you share how many robotic machines are currently in your network and your plans for new additions?"

   Answer: "We have approximately 15 robotic machines and plan to add 4 more this year. The investment into robotics aligns with our strategy to enhance our high-end procedural capabilities."

8. Question: "What is the expected trend for international customer growth over the next quarters?"

   Answer: "International business currently contributes around 8% of revenue, likely to increase slightly in absolute terms, primarily driven by oncology and cardiac patients. Long-term, we aim to maintain this contribution level."

9. Question: "Is there a franchise model involved in your diagnostics network expansion?"

   Answer: "While we are open to opportunities, we primarily focus on building our network organically by adding labs and touchpoints. The SRL brand's return will further strengthen our position in the diagnostics space, enhancing our B2C focus."

10. Question: "Could you clarify your margin guidance for the diagnostics segment?"

Answer: "Our guidance reflects an expected operating margin of 22% to 23% based on net revenue. We are confident this can be achieved as we continue to optimize our operations and expand our service offerings."