Fortis Healthcare Shares Could Rise 33% on Strong Earnings: Citi

Citi Initiates Coverage with Bullish Outlook

Shares of Fortis Healthcare Ltd. are in focus after global brokerage firm Citi initiated coverage on the stock with a 'Buy' rating. The firm has set a price target of ₹1,120, suggesting a potential upside of nearly 33% from its closing price of ₹845 on January 22, 2026. This positive initiation highlights the brokerage's confidence in the company's growth trajectory and financial health, positioning it as a strong contender in the Indian healthcare sector.

Citi's optimistic view is primarily based on the strong earnings visibility for Fortis. The brokerage projects the company's hospital EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) to grow at a Compound Annual Growth Rate (CAGR) of 23% between fiscal years 2026 and 2028. This robust growth forecast is expected to be driven by two key factors: the successful ramp-up of new bed capacity and significant margin expansion across its existing hospital network.

Strong Q3 Performance Underpins Confidence

Fortis Healthcare's recent financial results for the third quarter of FY26 lend weight to Citi's analysis. The company demonstrated healthy growth in its topline and operational metrics. Revenue for the December quarter saw a 17% year-on-year increase, rising to ₹2,251.95 crore from ₹1,928 crore in the same period of the previous fiscal year. This growth indicates sustained demand for its healthcare services and effective operational management.

Operationally, the company's performance was even more impressive. EBITDA climbed by a substantial 34% to ₹503.45 crore, up from ₹374.9 crore in Q3FY25. This led to a significant expansion in EBITDA margins, which improved by 300 basis points to 22.4% from 19.4% a year earlier. However, net profit saw a marginal dip of 3%, settling at ₹245.6 crore compared to ₹254.3 crore in the corresponding quarter last year.

Strategic Expansion and Operational Efficiency

Citi's report also emphasized Fortis Healthcare's solid execution track record and a well-structured expansion strategy as foundational pillars for future growth. The company is actively working on expanding its capacity, with plans to add approximately 2,000 beds between FY26 and FY29, primarily through brownfield projects. This strategic expansion is concentrated in high-potential regions like NCR, Punjab, and Bengaluru, which are known for high patient volumes and superior case-mix trends.

Furthermore, the brokerage noted that a steadily improving return on capital employed (RoCE) could support further valuation upside. The company's focus on scaling up its flagship hospitals and leveraging operating efficiencies is expected to drive profitability. The recovery of its diagnostics arm, Agilus, is also seen as a critical factor that will contribute to margin expansion and overall earnings growth in the coming years.

Analyst Consensus and Market Position

The positive sentiment from Citi is largely shared by the broader analyst community. Of the 17 analysts currently tracking Fortis Healthcare, a strong majority of 13 have issued a 'Buy' rating, while the remaining four have a 'Hold' rating. This widespread consensus underscores the market's confidence in the company's fundamentals and strategic direction.

Despite the positive outlook, the stock has seen a modest decline of over 6% year-to-date in 2026. However, the initiation of coverage by a major firm like Citi, coupled with strong underlying financial performance and clear growth catalysts, could provide the momentum needed for a potential re-rating of the stock. Fortis is also on a clear path to becoming net debt-free by FY28, which would further enhance its financial flexibility for future growth initiatives, either through organic expansion or strategic acquisitions.