FORTIS

’ s Growth Story Evolves with Brownfield Expansion and Margin Ambitions

has delivered strong shareholder returns over the past five years, driven by improved profitability and revenue growth in its core hospitals business. With plans to expand capacity and raise margins further, the company is positioned for continued growth—but rising debt and underperformance in diagnostics remain key risks. - Core Hospital Margins and Valuation Surge Under CEO Ashutosh Raghuvanshi, Fortis improved hospital segment margins from 12% in FY20 to 20.5% in FY25. This margin expansion, coupled with better realisations and revenue growth, helped double the company’s stock valuation over five years. Recent quarterly results reaffirm healthy growth in the hospital business. - Aggressive Capacity Expansion via Brownfield and O&M Routes Fortis plans to increase hospital bed capacity by 50% over the next 3–4 years, primarily through brownfield expansion and O&M agreements. Brownfield additions allow faster scale-up by leveraging existing infrastructure, while O&M deals help expand footprint with lower upfront investment. As new facilities reach optimal utilisation, Fortis aims to raise hospital margins to 25% in the next few years. Analysts expect a 430 bps margin expansion by FY28, with operating earnings projected to nearly double from FY25 levels. This provides a strong runway for earnings growth if execution remains on track. - Debt and Leverage Risks Emerge Fortis’ net debt to EBITDA rose sharply to 0.96x in September 2025 from 0.16x a year earlier, driven by acquisitions and capex. The company targets a net cash-positive position in the coming years, but elevated leverage could constrain flexibility if growth slows. Agilus Diagnostics has shown recent improvement but remains a weak spot. Additionally, Fortis’ O&M tie-up with Gleneagles Hospitals—known for lower margins—could dilute profitability if it evolves into a full merger. Both areas require close monitoring to sustain investor confidence.