The recent news announcement about the acquisition of Fortis Healthcare international by Fortis Healthcare India that did rounds and hiked prices of the healthcare giant, Fortis Healthcare has led us to analyze the financials of the stock in a deeper detail. This was Fortis’ second acquisition in a row in the past 4 months.
What was even more surprising is the entire acquisition was supposed to be an all cash deal, though the exact figures of the deal is yet unknown and neither do we have the financial details of FHIP available. However it is believed that the combined revenue of both the companies shall be up to USD 1 billion.
Past records also state that the Indian based company had spent about USD 25 billion making 7 different acquisitions in the last year. The balance sheet of Fortis however does not reflect adequate cash to close the deal and as per the last quarter data, it stood at USD 1.3 billion approximately. The kley question that needs to be answered here is that debt will be needed to fund the acquisition and it is still not clear how much the management is going to fund through various sources.
‘Bell the Bull’ states that without much clarity on the deal, it is not possible to give correct stands on the company’s shares but since the share prices seem to be good on the Sensex and the company has strong fundamentals, one can look at a target of around Rs. 180 – 185.