Buy Narayana Hrudayalaya; target of Rs 1350: Prabhudas Lilladher

Buy

Prabhudas Lilladher's research report on Narayana Hrudayalaya

Narayana Hrudayalaya (NARH) reported EBITDA of Rs3bn (up 12% YoY) in Q1FY25, broadly in line with our estimates. Cayman business reported profitability of Rs1.2bn, up 11% YoY. India business adjusted for NHIC losses reported healthy profitability, up 17% YoY and 2% QoQ. The company reiterates its aggressive capex plan, mainly towards its core and highperforming regions such as Bengaluru, Kolkata and Cayman, which enhances growth visibility. Despite capex intensity going up, RoE/ RoCE will remain healthy at ~23%. Our FY25E and FY26E EBITDA broadly remain unchanged.

Outlook

We maintain ‘BUY’ rating with a TP of Rs1,350/share, based on 23x FY26E EV/EBITDA for India business and 12x EV/EBITDA for Cayman hospitals. At CMP, the stock is trading at 17.5x EV/EBITDA (adj for IND AS). Faster ramp-up in new Cayman unit (operationalize from Q2FY25) will be key.

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Narayana Hrudayalaya - 070824 - prabhu