HSBC assigns 'Neutral' rating to Fortis Healthcare

HSBC has initiated coverage on Fortis Healthcare with a 'Neutral' rating and set a target price of Rs 115.

Key downside risks include a delay in the execution of key projects and risks associated with the integration of acquired facilities.

Upside risks will be a sooner than expected recovery of margins in SRL diagnostic business and inflow of target capital through planned listing of clinical establishment of REIT.

Over the past decade, Fortis has emerged as a serious contender in India's healthcare services market, pursuing strong organic as well as inorganic growth models.

The company's acquisition of Escorts, Malar and Wockhardt hospitals and more recently assets under Fortis Healthcare International have created a significant pan-Asia presence.

With a total of over 12,000 beds (including 4,000 under construction) across 75 hospitals, Fortis is on the brink of a growth spurt.

International business is a new challenge and has come at the cost of increasing leverage.