PETALING JAYA: The ongoing legal proceedings between India’s Fortis Healthcare Ltd and Daiichi Sankyo Co Ltd are not expected to have any material impact on Fortis’ operations, according to CIMB Research.
“We maintain our view that the ongoing legal proceedings between Fortis and Daiichi will not have any material impact on Fortis’ operations, particularly given IHH Healthcare Bhd
’s arm’s-length acquisition process and the absence of any evidence suggesting direct dealings with the Singh brothers,” the research house said.
CIMB Research said the brothers’ Fortis shareholding had declined primarily because several banks and financial institutions liquidated shares pledged as collateral for their borrowings between 2017 and 2018.
Their effective stake consequently fell to 0.77% in March 2018 from 67.62% in November 2017, prompting Daiichi to file contempt petitions against the brothers and the financial institutions.
“IHH reaffirmed that the November 2018 acquisition of Fortis was executed through injection of fresh capital amounting to 40 billion rupees into Fortis via preferential allotment of new shares, and no money was paid directly to the Singh brothers,” it said.
IHH had acquired a 31.1% stake at 170 Indian rupees per share, while Fortis used the proceeds to purchase assets it had leased from RHT Health Trust.
CIMB Research said IHH still intends to raise its Fortis stake to 51% by 2030 through annual increases of about five percentage points, potentially involving capital injections, secondary-market purchases or a share swap involving Gleneagles India.
“Based on Fortis’ market capitalisation as of Sept 4, 2026 and assuming no share-swap transaction is undertaken, we estimate the total capital commitment required over the next four years at approximately RM5.8bil,” it said.
CIMB Research maintained its “buy” call and RM10.30 per share target price for IHH, with no changes to its financial year 2026 (FY26) to FY28 earnings-per-share forecast.
Meanwhile, RHB Research said the Delhi High Court’s Aug 31 order for a six-month forensic audit was solely an investigative exercise and had no immediate effect on IHH’s balance sheet or provisioning.
“Ongoing operational activities, corporate restructuring exercises and growth plans should continue unhindered,” it said.
“A key positive from the briefing is that ongoing corporate actions can proceed during the six-month audit.
“IHH reiterated that the regulatory constraints previously were unblocked when the mandatory takeover offer or MTO was completed in November 2025 following approval from the Securities and Exchange Board of India, and that this forensic audit order does not alter that status,” it added.
RHB Research said the Gleneagles India-Fortis integration and IHH’s aim of raising its Fortis stake to 51% within three to five years remained on track.
“Based on our back-of-envelope calculation, if Fortis were to be named as a judgment debtor for Daiichi’s full award of 53 billion Indian rupees, or about RM2.5bil, IHH’s 31.17% share would equal about RM790mil, or a nine sen impact to our target price,” it said.
The impact would be eight sen under Daiichi’s narrower claim involving alleged 52.9 million dissipated shares valued at 4.84 billion Indian rupees.
“We believe these hypothetical financial extremes could be easily absorbed by IHH’s strong balance sheet and operating cash flow,” RHB Research said.
The research house maintained its “buy” call and its RM9.54 per share target price, while identifying the Tokyo District Court’s scheduled Sept 10 ruling on IHH unit Northern TK Venture’s damages claim against Daiichi as the principal near-term catalyst.
