Logn Term and investors without an appetite for Risk can blindly avoid the IPO of Fortis Healthcare. Our IPO Analysts had recommended an Avoid on Cairn Energy and had also told to BUY around Rs 100[It made a Low of Rs 110].
Fortis healthcare is a Ranbaxy promoter group company. Ranbaxu is facing one setback after the other and current management is not as strong as it used to be under late Dr. Parvinder Singh. Fortis is a recent entrant and is using acquisition and heavy investment to expand. This is a capital intensive business and hence the promoters decision for an IPO. Their have been some Pre-IPO PE Fund investments but small retail investors don’t have the appetite as PE Funds do 🙂
Fortis has been in Red since its operations. Fortis’ acquisition of Escorts is also in controversy and this is the major revenue contributor to Fortis’ bottomline. Fortis’ healthcares patient occupancy rates are also low [around 75% of capacity]. Overall not a worthy issue at an offer price between Rs 92 to Rs 110. You will get it below offer price after listing.