Rating agency Icra has cut the outlook on Fortis Healthcare Ltd’s non convertible debentures (rating “A+”) to negative from stable on the deterioration in FHL’s debt protection indicators.
There is significant increase in debt level and delay in equity raising plans, Icra said in statement today.
It has analysed FHL’s operating and financial performance on a consolidated basis. It includes subsidiaries, associate hospitals, and hospitals under O&M contract, all involved in providing healthcare services.
It has a short-term rating of “A1”on Commercial Paper (CP)/Short-term Debt (STD) program of FHL.
FHL’s gearing has increased from 0.61 times as of June 30th 2011, to 1.98 times as of June 31th, 2012, and interest coverage ratio has declined from 2.05 times in Q1FY12 to 1.01 times in Q1FY13.
The operational profile of the domestic business remains healthy. But, the lower margins of the international business coupled with the significant leveraging resulting from a series of acquisitions in FY2012 has led to deterioration in the company’s credit risk profile.
