The Delhi High Court’s order for a forensic audit of disputed Fortis Healthcare share transactions could complicate IHH Healthcare Bhd’s plans to increase its stake in Fortis Healthcare to 51% over the next three to five years, analysts said.
The audit, ordered on August 31, will examine the alleged dissipation of Fortis shares previously held by the Singh brothers, as well as transactions related to IHH’s investment in Fortis and Fortis’ subsequent acquisition of assets from RHT Health Trust.
BIMB Securities said an adverse audit finding could extend the long-running legal dispute and create hurdles for IHH’s plans to gain majority control of Fortis. However, a clean audit could help bring the dispute, which originated from a legal battle involving Japan’s Daiichi Sankyo, closer to a conclusion.
Analysts said Fortis remains on track with its brownfield expansion and potential mergers and acquisitions, while its integration with Gleneagles is progressing as planned.
RHB Investment Bank estimated that if Fortis were held liable for Daiichi Sankyo’s full ₹53 billion award, IHH’s 31.17% stake could translate into an exposure of around RM790 million. The bank, however, said such a scenario could be absorbed by IHH’s strong balance sheet and operating cash flow.
Despite the legal uncertainty, analysts remain largely positive on IHH. 24 of 26 analysts have a “Buy” rating, while two have a “Hold” rating. The consensus 12-month target price of RM10.20 represents potential upside of about 28%.
IHH shares have declined more than 7% year-to-date.