GICS Industry : Health Care Providers & Service l Sub Industry : Health Care Facilities l Website : www.fortishealth.

com

Fortis Healthcare Ltd

Key Stock Indicators
CMP (as on 11Feb 2011Rs/share):
52-week range up to11 Feb 2011 (Rs)(H/L):
Market Cap as on 11 Feb 2011(Rs mn):
Enterprise Value as on 11 Feb 2011 (Rs mn):

Shares outstanding (mn) :

Free Float (%) :
Average daily volumes (12 months)
Beta (2 year) :

151.5
183.55/129.30
34,379
76,063

Incorporated in 1996, Fortis Healthcare Limited (FHL) provides a comprehensive range of primary,
secondary and tertiary healthcare services. The company has expertise across 4 specialities, namely
heart care, brain and spine care, bone and joint care and minimal access surgery. FHL has hospitals
and medical facilities in Amristar, Bengaluru, Chennai, Faridabad, Delhi, Mumbai, Mohali, Raipur,
Kolkata, Jaipur and Mauritius.

KEY HIGHLIGHTS
Landmark acquisitions in FY10
The company acquired the Greenfield Hospitals division of Wockhardt Hospitals Ltd, comprising 10
hospitals 2 in Mumbai, 5 in Bangalore and 3 in Kolkata. With this acquisition, the total number of
Fortis hospitals in India increased to 48, and its bed capacity rose to ~7,700. The acquired hospitals
deliver high-end critical care to both domestic and international patients in areas of cardiac, neuroscience, orthopedics, minimal invasive surgery, renal science, kidney and liver transplantation. The
second landmark deal was FHLs purchase of a 25% stake in Singapore-based Parkway Holding, the
leading private healthcare provider in Singapore and Malaysia.
Hospitals under construction and completed
Construction of the Shalimar Bagh hospital in West Delhi has been completed and operations will
commence after the company obtains a few statutory clearances. The hospital is spread over an
area of approximately 7.34 acres of land and will have 350 beds in the first phase. The hospital will
offer specialised cardiac care, orthopaedics, neuro-science, renal science, mother and child care
and gastroenterology services. The second upcoming hospital is the Fortis International Institute of
Medical and Bio-Science (FIIMBS), with 2 multi-speciality hospitals, having 750 beds, along with a
medical college for 500 students. The hospital is expected to be completed during the fourth
quarter of FY11. FIIMBS will have Centres of Excellence in oncology, trauma, paediatrics, mother
and child care, cosmetology, gastroenterology, neuro-science and renal care. Construction work is
also going on at one hospital that is bought from Wockhardt. This 414-bed hospital at EM Bypass
road, Kolkata is scheduled for commissioning in the second quarter of FY11 and would be a Centre
of Excellence in cardiac sciences, brain and spine, bone and joints as well as minimal access
surgeries for eastern India. A radiation oncology unit at the Mulund Hospital (Mumbai) will also be
commissioned by Q2 FY11. The company has undertaken projects to enhance bed capacity at
Jaipur and at the Fortis Escorts Heart Institute in Delhi.

Ma r-10
9,486.5
14.2
449.9
4.7
10.6
1.4
106.8
17.9
3.0
14.4
66.4

Shareholding (As on December 31, 2010)

FII
6%

DII
2%
Others
10%

Promoter
82%

1 -m

3 -m

1 2 -m

-1 6

10

-9

-8

-1 4

10

6000

40

4000

20

2000

V olumes (RHS )

FOR TIS

J an-11

YTD

8000

60

D ec -10

R e tur ns (% )

10000

80

O c t-10

Stock Performances vis--vis market

12000

100

Nov -10

Stiff competition from leading/ charitable hospitals and medical centres in the region

14000

120

S ep-10

Shortfall of good doctors and nurses

('000)

J ul-10

(index )
140

Aug-10

Public expenditure on health services as a percentage of GDP in India is very low

J un-10

Apr-10

Change in government policies towards healthcare may affect business

N IF T Y

Mar-09
6,354.0
13.0
205.5
3.2
6.0
0.9
74.6
14.1
9.8
11.6
25.8

n.m. : Not meaningful

May -10

F O R T IS

Mar-08
5,301.2
3.1
-1,091.4
-20.6
2.0
-4.8
n.m
7.7
n.m
142.5

R evenue (R s m n)
E B ITD A m a rg ins (% )
P AT (R s m n)
P AT m a rg ins (% )
G ea ring (x)
E P S (R s /s ha re)
P E (x)
P /B V (x)
R oC E (% )
R oE (% )
E V/E B ITD A (x)

Indexed price chart

KEY RISKS

227
18.5
1,568,602
1.0

Key Financial Indicators

Mar-10

FORTIS
FORH:IN
10.0
0.0

F eb-10

NSE Ticker :
Bloomberg Ticker :
Face value / Share:
Div. Yield (%):

NIFTY

Note:
1) YTD returns are since April 1, 2010 to Feb 11, 2011.
2) 1-m, 3-m and 12-m returns are up to Feb 11, 2011.
.

CRISIL COMPANY REPORT | 1

Fortis Healthcare Ltd

BACKGROUND
Incorporated in 1996, Fortis was promoted by the erstwhile promoters of Ranbaxy Laboratories Ltd, Mr. Malvinder Singh and Mr. Shivinder Singh. Fortis grew
predominantly through acquisitions and has built only three greenfield hospitals at Mohali, Noida and Jaipur. Rest of its hospitals were acquired over the years. Key
acquisitions include the Escorts Heart Institute (Delhi) for Rs 5.9 billion (bn) in 2005 and 10 Wockhardt hospitals for Rs 9.1 bn in 2009. Out of the 10 acquired Wockhardt
hospitals, 8 are operational while 2 are in construction stage. FHL has hospitals and facilities in Amristar, Bengaluru, Chennai, Faridabad, Delhi, Mumbai, Mohali, Raipur,
Kolkata, Jaipur and Mauritius, among others.

COMPETITIVE POSITION
Peer Comparison

Revenue (Rs mn)

EBITDA ma rgins (%)
PAT (Rs mn)
PAT ma rgi ns (%)
Gea ri ng (x)
EPS (Rs /s ha re)
PE (x)
P/BV (x)
RoCE (%)
RoE (%)
EV/EBITDA (x)

Fortis Healthcare
Ltd
Mar-10
9,486.5
14.2
449.9
4.7
10.6
1.4
106.8
17.9
3.0
14.4
66.4

Apollo Hospitals
Enterprises Ltd
Mar-10
20,264.7
15.0
1,339.4
6.6
0.6
21.7
22.0
1.8
11.0
8.7
11.7

Indraprastha
Medical Corpn.
Mar-10
410,676.2
25.1
68,464.6
16.7
0.5
13.1
12.1
1.8
21.6
21.2
0.0

Lotus Eye Care

Hospital Ltd.
Mar-10
1,023,454.4
8.5
-21,208.4
-2.1
7.9
73.0
8.9
1.4
8.2
n.m.
0.0

n.m: Not meaningful

FINANCIAL PROFILE

Key Financial Indicators

Units

Top-line grows, margins improve in FY10

Revenue
FHL recorded a top-line of Rs 9.4 bn in FY10 as against a top-line of Rs 6.3 bn in FY09,
a growth of ~49%, boosted by the companys acquisition of the Greenfield Hospital
division of Wockhardt Hospitals Ltd and also due to growth in occupancies.
Operating margin increased by 120 basis points (bps) year-on-year in FY10 and stood
at 14.2% in FY10 while PAT margin increased by 150 bps. The company reported net
profit of Rs 450 million (mn) in FY10, up 119% from Rs 205 mn reported in FY09. This
was mainly due to 63.9% increase in operating profit and ~19% growth in other
income.

Rs mil li on

EBITDA ma rgins Per cent

Mar-08

Mar-09

Mar-10

5,301.2

6,354.0

9,486.5

3.1

13.0

14.2

-1,091.4

205.5

449.9

PAT

Rs mil li on

PAT ma rgi ns

Per cent

-20.6

3.2

4.7

Revenue growth Per cent

-3.4

19.9

49.3

EBITDA growth

Per cent

-67.7

398.7

63.9

PAT growth

Per cent

-4.2

n.m.

119.0

Gea ri ng

Ti mes

2.0

6.0

10.6

RoCE

Per cent

n.m

9.8

3.0

RoE

Per cent

0.0

11.6

14.4

INDUSTRY PROFILE
Hospitals
The market size of the healthcare delivery (hospitals) sector was around Rs 1,940 billion in 2009. The sectors pricing flexibility is constrained by low domestic per capita
income, negligible health insurance coverage and low government expenditure. The government has introduced various measures in an effort improve Indias healthcare
facilities. However these regulations do not have a direct impact on the performance of the sector as it is largely a non-discretionary expenditure for the consumers.
Hospitals are classified as providing primary, secondary and tertiary care based on the type of service rendered and the complexity of ailments the hospital is capable of
dealing with. Primary care facilities offer basic, point-of-contact medical services and healthcare prevention services in an outpatient setting. They are typically clinics with
one or more general practitioners on site. These hospitals do not have any intensive care units (ICUs) and there are no surgeries taking place. Secondary care hospital is the
first hospital a patient approaches for common ailments. They can be further classified as general secondary care typically having a bed size of 50-100 and specialty
secondary care hospitals with a typical bed size of 100-300. The essential medical specialties in general secondary care hospitals include internal medicine, general surgery,
obstetrics & gynecology (OBG), pediatrics, ENT, orthopedics and ophthalmology. Specialty secondary care hospitals treat specialties like gastroenterology, cardiology,
neurology, dermatology, urology, dentistry and oncology. Tertiary care hospitals typically have all the medical specialties under one roof typically having over 300 beds.
Tertiary care hospitals can be either single specialty or multi specialty hospitals. While the former caters to a specific ailment, the latter usually treats multi-organ failure,
high risk and trauma cases

CRISIL COMPANY REPORT | 2

Fortis Healthcare Ltd

ANNUAL RESULTS
Income Statement
(Rs million )
Net Sales
Operating Income

Mar-08
5,211.9
5,301.2

Mar-09
6,278.6
6,354.0

Mar-10
9,390.5
9,486.5

EBITDA
EBITDA Margin

165.4
3.1

824.9
13.0

1,351.8
14.2

Depreciation
Interest
Other Income

468.2
696.6
413.5

487.4
485.6
308.5

599.4
514.3
365.0

-895.8
-1,091.4

246.7
205.5

484.0
449.9

PAT Margin

-20.6

3.2

4.7

No. of shares (Mn No.)

226.7

226.7

317.3

-4.8

0.9

1.4

Mar-08
-586.0
-9.8
468.2
-864.7

Mar-09
160.4
-20.6
487.4
719.1

Mar-10
603.2
-166.6
599.4
276.6

-992.3
-1,296.9
-326.2

1,346.3
-1,007.0
-210.6

1,312.6
-11,886.5
-33,943.6

PBT
PAT

Earnings per share (EPS)

Cash flow
(Rs million )
Pre-tax profit
Total tax paid
Depreciation
Change in working capital

Balance sheet
(Rs million )
Equity share capital
Reserves and surplus
Tangible net worth
Deferred tax liablity:|asset|
Long-term debt
Short-term-debt
Total debt
Current liabilities
Total provisions
Total liabilities
Gross block
Net fixed assets
Investments
Current assets
Receivables
Inventories
Cash
Total assets

Mar-08
3,766.7
-1,315.3
2,451.4
-8.5
3,432.8
1,391.4
4,824.2
1,073.1
342.1
8,682.3
6,785.6
5,470.0
330.6
2,881.7
959.1
123.5
160.6
8,682.3

Mar-09
2,266.7
-1,179.1
1,087.6
12.2
4,944.9
1,606.6
6,551.5
1,049.7
1,036.9
9,737.9
6,934.2
5,943.9
541.3
3,252.8
1,335.1
132.6
579.5
9,738.0

Mar-10
3,173.2
2,003.9
5,177.2
-120.2
33,117.1
21,680.1
54,797.2
2,421.9
692.4
62,968.5
11,093.6
11,945.9
34,484.9
16,537.7
1,566.7
237.8
13,113.4
62,968.5

Revenue growth (%)

EBITDA growth(%)
PAT growth(%)

Mar-08
-3.4
-67.7
-4.2

Mar-09
19.9
398.7
n.m.

Mar-10
49.3
63.9
119.0

EBITDA margins(%)
Tax rate (%)
PAT margins (%)

3.1
-1.1
-20.6

13.0
8.3
3.2

14.2
30.2
4.7

Dividend payout (%)

Dividend per share (Rs)
BV (Rs)
Return on Equity (%)
Return on capital employed (%)

0.0
0.0
10.8
n.m.
n.m.

0.0
0.0
4.8
11.6
9.8

0.0
-13.5
8.5
14.4
3.0

Gearing (x)
Interest coverage (x)
Debt/EBITDA (x)

2.0
0.2
29.2

6.0
1.7
7.9

10.6
0.3
40.5

Ratio

Cash flow from operating activities

Capital Expenditure
Investments and others

Cash flow from investing activities

Equity raised/(repaid)
Debt raised/(repaid)
Dividend (incl. tax)
Others (incl extraordinaries)

-1,623.1
4,481.4
-3,753.3
0.0
1,741.1

-1,217.6
-30.1
1,727.3
0.0
-1,407.0

-45,830.1
9,210.2
48,245.7
-4,288.4
3,883.7

Cash flow from financing activities

Change in cash position
Opening cash

2,469.2
-146.2
306.8

290.2
418.9
160.6

57,051.2
12,533.7
579.5

Asset turnover (x)

Current ratio (x)

0.8
0.8

0.9
1.1

1.1
1.1

160.6

579.5

13,113.4

Gross current assets (days)

123

147

611

Closing cash
n.m : Not meaningful;

QUARTERLY RESULTS
Profit and los s ac c ount
(Rs million)
No of Months

S ep-10

% of Rev

Revenue

7,161.1

EBITDA
Interes t

S ep-09

% of Rev

% of Rev

100.0

1,940.8

100.0

2,433.6

34.0

334.4

1,352.5

18.9

77.6

232.9

3.3

PBT

774.0

PAT

743.7

Depreciation

J un-10

S ep-10

% of Rev

S ep-09

% of Rev

3,715.8

100.0

10,876.9

100.0

3,826.0

100.0

17.2

812.1

21.9

3,245.7

29.8

646.2

16.9

4.0

709.3

19.1

2,061.8

19.0

181.7

4.7

117.6

6.1

215.2

5.8

448.1

4.1

231.1

6.0

10.8

147.3

7.6

(111.3)

(3.0)

662.7

6.1

246.8

6.5

10.4

138.0

7.1

(133.0)

(3.6)

610.7

5.6

219.3

5.7

CRISIL COMPANY REPORT | 3

Fortis Healthcare Ltd

FOCUS CHARTS & TABLES
Per c ent
300

Qua rte rly sa le s & y-o-y g rowth

4,000
3,000
2,000
1,000
0

R s mn
800

250

600

200

400

150

Per c ent
1,600
1,400
1,200
1,000
800
600
400
200
0
-200
-400

Qua rte rly P AT & y-o-y g rowth

200

100

0
50

Per cent
80
70
60
50
40
30
20
10
0
-10
-20

S hareholding P attern (P er c ent)

Mar 2010
J un 2010
P rom oter
76.5
76.5
F II
3.6
5.2
D II
2.0
1.3
Others
18.0
17.0

S ep 2010
81.5
5.5
2.7
10.3

Dec 2010
81.5
6.3
2.0
10.2

S ep-10

J un-10

Mar-10

D ec -09

S ep-09

J un-09

Mar-09

D ec -08

OPM
B oard of Direc tors
Direc tor Name
Ma lvinder Mohan S ing h (Mr.)

Jun-10

Mar-10

Dec-09

Jun-09

Mar-09

Dec-08

Sep-10

Jun-10

Mar-10

Dec-09

Sep-09

Jun-09

Mar-09

Dec-08

Sep-08

Jun-08

Mar-08

-1
-1.5
-2

Sep-08

1
0.5
0
-0.5

Net profit growth y-o-y (RHS)

Movement in operating and net margins

Jun-08

EPS

Mar-08

Rs/share
2.5
2
1.5

Net Profit

Sep-09

Sales growth y-o-y (RHS)

S ep-08

Mar-08

S ep-10

J un-10

Mar-10

D ec -09

S ep-09

J un-09

Mar-09

D ec -08

S ep-08

J un-08

Mar-08

Sales

J un-08

-200

Sep-10

Rs mn
8,000
7,000
6,000
5,000

NPM

S hivinder Moha n S ing h (Mr.)

Des ig nation
N on-E xecutive C ha irm a n, P rom oterD irector
Ma na g ing D irector, P rom oter-D irector

G urcha ra n D a s (Mr.)
B a linder S ing h D hillon (Mr.)
S unil G odhwa ni (Mr.)
P reetinder S ingh J os hi (D r.)

N on-E xecutive
N on-E xecutive
N on-E xecutive
N on-E xecutive

D irector
D irector
D irector
D irector

R a ja n K a s hya p (Mr.)
Tejinder S ing h S herg ill (L t.G en.)
H a rpa l S ingh (Mr.)
S a vinder S ing h S odhi (J us tice)

N on-E xecutive
N on-E xecutive
N on-E xecutive
N on-E xecutive

D irector
D irector
D irector
D irector

Additional Disclosure
This report has been sponsored by NSE - Investor Protection Fund Trust (NSEIPFT).
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CRISIL COMPANY REPORT | 4