Buy Narayana Hrudayalaya; target of Rs 1100: Prabhudas Lilladher

Prabhudas Lilladher's research report on Narayana Hrudayalaya

We hosted Viren Shetty (Executive Chairman) of Narayana Hrudayalaya’s (NARH) for NDR at Mumbai. Management plans to continue with its aggressive capex and grow 2x throughput over next 4-5 years by debottlecking, refurbishment, adding more cath labs and onco block. More importantly capex spend would be towards core and high performing regions such as Bangalore, Kolkata and Cayman to enhance growth visibility. We expect 13% EBIDTA CAGR over FY23-25E. Despite capex intensity going up, RoE/RoCE will remain healthy at ~25%.

Outlook

At CMP, stock is trading at valuations of 18x EV/EBIDTA (adj for IND AS) and 27.5x P/E on FY25E. Maintain ‘BUY’ rating with a revised TP of Rs. 1,100/share (earlier Rs980/share), based on 22x FY25E EV/EBIDTA for India business and 12x EV/EBIDTA for Cayman. Faster ramp up in new Cayman unit will be key.