Fortis Healthcare Ltd Q2 FY27 Results Analysis: Revenue Jumps 17%, PAT Slips on ESOP Charge

Fortis Healthcare Ltd's Q2 FY27 numbers came in mixed, with revenue of Rs. 2,734.83 Cr (+17.30% YoY) and PAT growth of -2.54% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quarter Snapshot

Revenue grew 17.30% YoY with Healthcare at +18.56% tracking the 15%+ guidance and Diagnostics at +12.16% within its 12-13% band, while EBITDA margin expanded 136 bps sequentially to 23.03%. Reported PAT declined 2.54% YoY due to the ESOP charge (~Rs.40 Cr), a higher 25.87% tax rate and lower other income, and receivables grew 26.75% since March with doubtful-debt charges doubling to Rs.52.16 Cr in H1. Cash conversion at 1.27x CFO/PAT and net debt reduction of Rs.101.55 Cr support balance-sheet quality, with the ex-ESOP margin guidance leg still unverified from the filing.

Key Investment Insights

Key Positives

• Consolidated revenue grew 17.30% YoY to Rs.2,734.83 Cr and 7.46% QoQ
• Healthcare segment revenue grew 18.56% YoY, ahead of the 15%+ FY27 organic guidance; Diagnostics grew 12.16% YoY, within the 12-13% guided band
• Diagnostics segment result grew 14.30% YoY and 25.36% QoQ with margin up ~36 bps YoY to 19.08%
• EBITDA margin expanded 136 bps sequentially to 23.03%
• H1 CFO/PAT of 1.27x; free cash flow of Rs.376.58 Cr after Rs.375.84 Cr capex
• Net debt reduced Rs.101.55 Cr in H1; debt/equity improved to 0.29x from 0.34x
• Long-term borrowings repaid Rs.503.46 Cr vs Rs.7.59 Cr raised in H1
• Supreme Court disposed of Fortis' SLP with no liability, penalty or fine imposed; limited review unmodified

Risk Factors

• Reported PAT declined 2.54% YoY to Rs.320.47 Cr despite 17.30% revenue growth
• EBITDA margin compressed ~180 bps YoY to 23.03%, with ESOP charge of ~Rs.40.34 Cr (~148 bps of revenue)
• Effective tax rate rose ~317 bps YoY to 25.87%
• Trade receivables rose 26.75% since March 2026 to Rs.1,322.95 Cr; H1 doubtful-debt charge doubled to Rs.52.16 Cr; allowance ratio 4.41% vs 2.60% YoY
• Healthcare segment EBIT margin compressed ~154 bps YoY to 17.49%
• Other income fell 70.28% YoY to Rs.6.71 Cr