Fortis Health. (FORTIS)

FairStock Score: 38/100 — MIXED

Score breakdown: P/E: 0/3 · ROCE: 0/2 · Growth: 1/2 · Dividend: 0/1

Key Financials

Strengths

• Sales growth of 15.99% and profit growth of 24.81% show strong operating momentum, with latest quarter revenue at ₹2,265 Cr and net profit at ₹197 Cr.
• Balance sheet is conservative: Debt/Equity of 0.34, Altman Z-Score of 4.99, and Piotroski F-Score of 8/9 indicate financial stability.
• Free cash flow of ₹644 Cr provides internal funding capacity for expansion and reduces dependence on external capital.
• Five-year revenue CAGR of 14.07% demonstrates a sustained growth track record in the hospital business.

Concerns

• Valuation is extreme: P/E of 70.62, P/B of 7.85, EV/EBITDA of 110.79, and PEG of 18.25 leave almost no margin of safety.
• Graham Number of ₹183.85 and DCF intrinsic value of ₹80.67 are far below the current price of ₹926.70, implying negative margin of safety of 412.72%.
• ROE of 10.76% and ROCE of 11.96% are modest for a company trading at premium multiples, suggesting limited economic moat.
• Dividend yield of 0.11% offers negligible income while waiting for growth to prove itself, and promoter holding at 31.17% remains moderate.

AI Analysis

Fortis is a growing hospital franchise, but my rule is never pay more than a business is worth. The operating numbers are decent: sales up nearly 16%, profit up 24.81%, five-year revenue CAGR 14.07%, and latest quarter delivered ₹2,265 Cr revenue and ₹197 Cr net profit. Free cash flow of ₹644 Cr and debt-equity of only 0.34 show financial conservatism. Piotroski F-score of 8/9 and Altman Z of 4.99 point to a sound balance sheet, and ROCE of 11.96% is respectable but not extraordinary. Hospital economics are capital hungry; beds, equipment, and talent all demand reinvestment. So while this is a quality operator, I do not see a wide economic moat in the numbers. My valuation discipline screams caution. At ₹926.70, the market capitalises the company at ₹71,166 Cr. That is 70.62 times earnings, 7.85 times book value of ₹118.11, and 110.79 times EV/EBITDA. Graham's formula gives a value of ₹183.85, and even the DCF estimate is just ₹80.67. The margin of safety is negative 412% — that is the opposite of what I look for. The PEG of 18.25 tells me the growth is already more than priced in. With dividend yield of 0.11%, I am not being paid to wait. Promoter holding of 31.17% is adequate, but I want to see disciplined capital allocation before trusting the story. Fortis may be a fine compounder one day, but at this price the odds are not in my favour. I would rather miss the rally than risk permanent capital. The FairStock score of 45/100 correctly calls it mixed; to me, it means 'excellent business, terrible price.'

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer