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ICICI Securities Report
Fortis Healthcare Ltd. reported weak Q1 FY21 performance as it was impacted by lockdown across the country.
We expect the performance to gradually improve hereon as recovery was visible in June-July 2020 in terms of occupancy and pathology tests. We believe normalisation is likely to happen in H2 FY21.
Revenue declined 46.8% YoY to Rs 6.1 billion with hospitals declining 46.5% and SRL (diagnostics) dropping 47.8%. This led to negative Ebitda margin of 17.0% (our estimate 12.0%) despite meaningful cost control on selling general and administrative front.
We expect gradual operational improvement in terms of occupancy and average revenue per occupied bed day at hospitals with Ebitda margin expansion in hospitals and diagnostics led by cost rationalisation and operating leverage.
Management has also taken various steps to reduce costs further by pruning personnel cost.
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