Fortis shares close lower as Street fears earnings will be hit by Covid-related sales slump


By CNBCTV18.com IST (Released)

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Fortis Healthcare is expected to see earnings fall 60% year-over-year (YoY) due to lower COVID-19 related sales as the Omicron wave takes hold and the base is high.

Shares of Fortis Healthcare closed down more than one percent ahead of the announcement of its first-quarter results, which are expected to see a 60 percent decline in year-on-year (YoY) earnings in due to lower sales related to COVID-19 as the Omicron wave sets in and base high.

The title ended down 1.29% at Rs 264 per share on BSE. The stock gained 10.28% last month while it has fallen 11% this year so far. Over the past year, the stock has gained 8.74%, outperforming the Sensex by 1.59%.

*as of July 27, 2022.

According to Axis Capital estimates, revenue is expected to increase by 2% to Rs 1,436.7 crore, while earnings before interest, tax, depreciation and amortization or EBITDA – a measure of the overall financial performance of a company. business – is expected to fall 7.3%.

The drop is believed to be mainly due to exceptional COVID-related activities amid a surge in cases last year.

Margin is expected to decline by 1.7% while profit is expected to be Rs 103.3 crore from Rs 263.5 crore in the first quarter of FY22.

Sequentially, revenue is expected to increase 4.3% and EBITDA is expected to increase 15%. Margin could be 1.8% higher while earnings are expected to increase 18.6% as occupancy levels recover from the impact of COVID-19.

The occupancy rate should be around 66% in the first quarter against 59% in the last quarter.

The diagnostics business, however, is expected to shrink due to lower COVID-19 related sales compared to a year ago, which will impact margins. Diagnostic margins are expected at 22.5% vs. 26% QoQ.

Overall, growth is expected in hospital activity as the impact of COVID-19 subsides and international medical tourism normalizes.

Key items to watch will include management comments on capital expenditures, average revenue per bed, competitive outlook in diagnostics and updates on open offerings.


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