14 Apr 07 Fortis Healthcare – Valuations Expensive but Listing gains expected
As Fortis Healthcare is currently making losses and is likely to continue making losses till FY09, it is difficult to use a P/E based valuation model. Used EV/S model for valuing the stock, the IPO is priced at 4.2x EV/S of FY09. This valuation is very high when compared to its market leader and profit-making, listed peer, Apollo Hospitals Enterprises Ltd. (AHEL), which is at 2.1x EV/S for FY09.
However since the company belongs to the Ranbaxy group and looking at the state of the Indian IPO market, it is highly likely that this IPO will reward investors with good listing gains. The Indian healthcare Industry is huge and is growing rapidly. Hence Fortis Healthcare is likely to ride this boom and the long term picture looks rosy as well.
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It is too much to expect that Fortis wil
list at Rs. 120/- or more. Any way good
luck to all those who got the allotment.
If it really shows up at Rs. 120/- or
more, dispose off of major portion ofyour
holding in the morning itself and wait
for the trend.
Research by QI investors on Fortis shows major gains. Listing at Rs 120. Rise to Rs 145 in 3 weeks time. Therafter stabilisation of price levels at Rs 160-165 for next 9 months. Then shoot upto Rs 225/- after next yeras financial results are out.
YKumar