FORTIS Healthcare

Company's Price Has Appreciated 174% In A Year With A Premium Valuation

 

FORTIS Healthcare, one of the country's fastest-growing healthcare companies, has added another feather in its cap by acquiring a 24% stake in Parkway Holdings, one of the leading healthcare companies in Asia. With this acquisition, Fortis, which has till now been on an acquisition-spree in India, is setting its global footprint. 

   Parkway Holdings, a Singaporelisted group, runs a network of 16 hospitals with a total capacity of 3,400 beds in Singapore, Malaysia, India, the UAE, Brunei and China. This stake buy is likely to give Fortis access to other markets across Asia. The acquisition will also increase its existing network to 62 hospitals with a combined bed strength of 10,000 beds. This will catapult the company to be the largest private healthcare player in the country. 

   The company is buying the stake from private investment firm TPG Capital at a value of $685.3 million (around Rs 3,124 crore). While the company has been raising funds to build its warchest for acquisitions, it is yet to divulge the funding source for this stake buy. 

   Fortis has been in thick of action since past one year. For the company, this stake purchase comes on close heels of its acquisition of 10 Wockhardt Hospitals last year. Recently, it announced plans to raise around Rs 1,250 crore for inorganic expansion. This, besides the earlier fund-raising exercises through a public issue, was followed up by a rights issue. 

   The company's stock price closed 4.8% higher for the day after the acquisition news was announced. The stock has been closely tracking the company's inorganic growth and expansion plans. The stock price has witnessed an appreciation of 174% since past one year. It turned an outperformer to the Sensex and ET Pharma Index since the beginning of this year. It is currently valued at a market cap of over Rs 5,000 crore — more than six times its annual revenues. These are premium valuations for a healthcare company higher than its erstwhile larger peer Apollo Hospitals. 

   With the momentum continuing in the company's inorganic expansion, the company's potential as an investment bet in the healthcare will keep on rising.