Fortis Healthcare jumps on Australia divestment move

MUMBAI Mon Dec 17, 2012 11:03am IST

Related Topics

Stocks

   

MUMBAI (Reuters) - Shares in Fortis Healthcare (FOHE.NS) soared on Monday on the company's plans to raise A$270 million through divestment of its Australia dental business, a move that would cut its debt.

Fortis, India's No. 2 hospitals chain after Apollo Hospitals Enterprise (APLH.NS), runs healthcare facilities in Singapore, Malaysia, the Gulf and other Asian countries and had a consolidated net debt of $1.1 billion at end-June.

The company said it is selling its 64 percent stake in Dental Corp Holdings Ltd, Australia, to British medical services group Bupa to focus on high-end healthcare operations in Asia.

The entire proceeds will be used to reduce the group's debt, Fortis group Chief Executive Vishal Bali told news channel CNBC-TV18.

Some analysts were skeptical about the move as the Australian business, which had A$339 million in sales in the 12 months to June, was one of the key revenue generators for Fortis.

"Although prima facie the deal looks good, it will have a negative impact on a long-term basis," said Siddhant Khandekar, analyst at ICICI Direct.

The Dental Corp business has operating margins of 15 to 18 percent, which is higher than Fortis' overall operating margin, Khandekar said.

Fortis bought the Dental Corp stake in January 2011, hoping to expand the business across other regions but has been unable to do so.

It raised the number of dental practices in Australia and New Zealand to 190 from 140 in the nearly two years it owned the business, the company said in a statement late on Sunday.

Fortis shares were up 6.2 percent at 116 rupees on Monday morning, slightly below an earlier high of 117.35 rupees, compared to a 0.13 percent fall in the BSE Sensex.

(Reporting by Kaustubh Kulkarni and Abhishek Vishnoi)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Shares Hit Record

Sensex, Nifty rise to second consecutive record high

Sensex surges 500 points on BOJ easing, L&T gains

The BSE Sensex and Nifty surged to record highs for a second consecutive session on Friday after Bank of Japan's surprise expansion of its massive stimulus programme raised hopes for additional foreign inflows, boosting blue-chips such as Larsen & Toubro.  Full Article 

REUTERS SHOWCASE

Wilful Negligence?

Wilful Negligence?

SEBI piles pressure on Sahara to sell overseas hotels  Full Article 

Indian Economy

Indian Economy

India's fiscal deficit in H1 almost 83 pct of full-year target.  Full Article 

M&M Earnings

M&M Earnings

M&M Q2 net profit down 4 percent, hit by poor monsoon.  Full Article 

Ban on E-Cigs?

Ban on E-Cigs?

Govt considers ban on e-cigarettes, sale of single smokes.  Full Article 

Commodities

Commodities

Silver futures in India hit four-year low on global cues.  Full Article 

BOJ Policy

BOJ Policy

BOJ shocks markets with surprise easing as inflation slows.  Full Article 

Shadow Banking

Shadow Banking

China's shadow banking sector growing rapidly, third largest in world - FSB.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage