Buy Narayana Hrudayalaya; target of Rs 1420: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Narayana Hrudayalaya has recommended buy rating on the stock with a target price of Rs 1420 in its research report dated September 03, 2024.

Broker Research

September 03, 2024 / 11:28 IST

Buy

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Prabhudas Lilladher's research report on Narayana Hrudayalaya

We hosted Mr. Viren Shetty (Executive Chairman) and Dr. Anesh Shetty (CEO – HCCI Cayman) of Narayana Hrudayalaya (NARH) for NDR at Mumbai. The management reiterated its aggressive capex plan and commitment towards growing throughput over the next 3-4 years through debottlenecking, refurbishment and better bed mix. In the medium term, NARH intends to add 1,500 beds through greenfield expansion across Bengaluru, Kolkata and Raipur, benefits of which will be seen from FY28/29. More importantly, capex spend would be mainly towards core and high-performing regions such as Bengaluru, Kolkata and Cayman, to enhance growth visibility.

Outlook

We expect 14% EBITDA CAGR over FY24-27E. RoE/RoCE will remain healthy at ~24/21%, despite capex intensity going up. At CMP, the stock is trading at valuations of 18.4x EV/EBITDA (PRE IND AS) and 27.4x P/E on FY26E. Our FY25/FY26E EBITDA estimate stands reduced by 5%/4% as we factor in higher losses from the new unit at Cayman. Maintain ‘BUY’ rating with a revised TP of Rs1,420/share (earlier Rs1,350/share) as we roll forward, based on 23x Sep’26E EV/EBITDA for India business and 12x EV/EBITDA for Cayman. Faster ramp-up in the Cayman unit will be the key.

For all recommendations report, click here