Fortis Healthcare Ltd has announced that its indirect wholly-owned subsidiary, International Hospital Limited (IHL), has received an income tax demand. The demand is for ₹76.19 crore. It pertains to the Assessment Year 2019-20.
The order was issued by the Income Tax Authority. It relates to the disallowance of interest expenses claimed by IHL for FY19.
IHL is currently reviewing its legal options. This includes the possibility of appealing the order. IHL received the order on April 3, 2025. Fortis Healthcare has assured its stakeholders that it will provide updates on any further developments.
Fortis Healthcare has reiterated its commitment to regulatory compliance. The company stated that it is addressing this matter in accordance with all applicable legal provisions.
As per credit rating agencies, Fortis Healthcare has demonstrated strong financial performance in several areas. The company has achieved significant profit growth. Profit growth over the past 3 years is 262.20%.
The company has also shown good revenue growth. Revenue growth over the past 3 years is 23.13%. Fortis Healthcare is virtually debt-free.
The company also has an efficient Cash Conversion Cycle of -508.78 days.
However, some financial metrics indicate areas of concern. Fortis Healthcare has a poor Return on Equity (ROE). The ROE over the past 3 years is 1.05%.
The company also has a poor Return on Capital Employed (ROCE). The ROCE over the past 3 years is 2.35%.
Additionally, the company’s shares are currently trading at high valuation multiples. The Price to Earnings (P/E) ratio is 280.18. The Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization (EV/EBITDA) ratio is 106.91.
Fortis Healthcare’s subsidiary faces a tax demand, but the company asserts no impact on financials. Strong profit and revenue growth are tempered by low ROE/ROCE and high valuation. More news is expected to emerge on this front in the coming days.
At 2.30 PM, Fortis Healthcare share price was down by 2.68% and was trading at ₹642.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.
Published on: Apr 4, 2025, 3:03 PM IST
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