Fortis Healthcare in pink of health

Shares of Fortis Healthcare are up 4.4% at Rs. 109, after cooling down from day’s high of 111.25. Volumes of 1.05 lakh shares on BSE in the first hour of trade are over three times the two week average quantity of 33,000 shares.

India’s largest private hospital chain had has announced sale of Quality Healthcare Medical Services, a Hong Kong based healthcare chain, to Bupa for USD 355 million (or Rs. 2,185 crore). Fortis had acquired Quality Healthcare in 2011 from its promoter brothers Malvinder and Shivinder Singh, who had purchased the same in October 2010 for about USD 190 million.

The divestment, third international sale in the last 6 months, will not only help Fortis focus on India business (which will now account for ~95% of revenues), but will also pare debt to 2,300 crore from Rs. 7,500 crore and in-turn reduce net debt to equity ratio to less than 0.3x, down from 1.6x as on 30th Sept 2012. The deal, expected to be completed this month, will create further room for company’s growth by strengthening its balance sheet.