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Informist, Monday, May 25, 2026

 

--Fortis Health: Will add capacity of over 400 beds in FY27 

--CONTEXT: Comments by Fortis Health's mgmt in post-earnings analyst call 

--Fortis Health: Diagnostics ops to see EBITDA margin of around 23-24% FY27 

--Fortis Health: No specific timeline for parent co IHH to hike stake in co 

--Fortis Health: Some new hospitals have started contributing positively to fincl 

--Fortis Health: To gradually develop digital presence via phone application 

 

By Ruchira Kagita and Anand JC 

 

MUMBAI/NEW DELHI – Fortis Healthcare Ltd. Monday said it expects revenues of its hospital business growing 15% on year in 2026-27 (Apr-Mar), slower than the 19% growth registered in FY26. The management expects revenue of its diagnostics business to grow in double-digit in FY27. However, it did not specify the range. In FY26, the top line of its diagnostics business improved almost 9% on year.

 

Fortis Healthcare's management expects its diagnostics business' earnings before interest, taxes, depreciation, and amortisation margin to be around 23-24% in FY27, compared to 23.6% in FY26. The EBITDA margin of its hospitals business is expected to improve by 150 basis points from 22.2% in FY26.

 

In the past, Fortis Healthcare had guided for an EBITDA margin of 25% by FY28 for its hospital business. The company said this plan remains intact. "If at all, we are more confident now that we can continue to deliver this progress every year at least to 1.5-2% year on year," a senior executive said. The hospitals division contributed 85% the company's total revenue in FY26.

 

Brownfield expansion plans are seen supporting the improvement in margin, a top executive told analysts in a post-earnings conference call. The new acquisitions will also slowly start contributing to growth from this fiscal, the management said.

 

On the occupancy front, the top brass of Fortis Healthcare said that the decline in FY26 was primarily due to a reduction in the international business, particularly in its key unit, the Fortis Memorial Research Institute in Gurugram, Haryana. In Punjab, the capping of medical oncology drugs led to some decline in occupancy, the management said. In FY26, the overall hospitals' occupancy level stood at 69%, as against 68% in FY25.

 

The hospital network aims to add 173 beds in FY28 now, much lower than the 465 guided for earlier. This divergence is mainly due to delays in expansion plans at the Shalimar Bagh facility, the management clarified.

 

Fortis Healthcare intends to incur INR 9 billion annually towards capital expenditure till FY29. Out of this, 60% will be allocated for maintenance and the rest for growth. The management also said they plan to commission over 500 beds through brownfield expansion in FY28.

 

The company will focus on brownfield expansion in FY27. Going forward, it seeks to increase occupancy at its BG Road facility in Bengaluru. The goal is to bring the occupancy above 65%, the top executives said, while adding that high competition is weighing on the metric for the hospital. A new tower is being planned at BG Road facility in brownfield plans, the management said. New towers are also expected to come up at the Shalimar Bagh, Mohali, and Mulund units.

 

Doctor costs for the company increased "slightly" at select hospitals during the quarter. However, the company does not expect it to increase further. They are fairly comfortable with their current pool of clinicians, the executives said.

 

IHH Healthcare Berhad, among Asia's largest hospital group, holds a 31% stake in Fortis Healthcare. The company intends to increase this to around 50% on a medium-to-long term basis, it had told The Economic Times back in February. Fortis Healthcare's management said it expects this to happen "over a period of time" and "as and when the company needs the capital."

 

Fortis Healthcare has no plans to demerge its diagnostics division, as it is currently focusing on improving the business' profit margin. "The business has started showing good results and (we are) getting full potential out of the business. So we will continue to strengthen the business performance," the management said. "I think this is not the right time to do any sort of value unlocking at this point," the executive added.

 

The healthcare major's operations are based on tertiary, quaternary, and critical care. The company intends to focus on preventive healthcare and physical health care services, which are primary care services in nature. "This doesn't form a very large segment of patients, but it is very important for the patient. We understand that. So, we will gradually develop our digital presence with our app," the company said. "We will enhance those offerings and increase our presence in the primary space. But that is not a focus area right now," the company added.

 

Fortis Healthcare had reported its March quarter earnings on Friday after the markets closed. It reported a 45% on year rise in its consolidated net profit to INR 2.66 billion while its top line rose 18% to INR 23.65 billion. The company's revenue from the hospitals business increased 19% on year to INR 20.23 billion while the diagnostics division reported a revenue of INR 3.87 billion, up 11%.

 

The company's bottom line in FY26 grew 35% on year to INR 10.42 billion and its revenue rose 17% to INR 91.28 billion. At 1443 IST, shares of the company were 1% higher at INR 970.25 on the National Stock Exchange.  End

 

Edited by Vandana Hingorani

 

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