Buy Narayana Hrudayalaya target of Rs 1420 Prabhudas Lilladher

Prabhudas Lilladher's research report on e Narayana Hrudayalaya

Narayana Hrudayalaya (NARH) reported EBITDA of Rs3.1bn (flat YoY) in Q2FY25, below our estimates due to ramp-up cost incurred for the new Cayman unit. Cayman business reported profitability of Rs950mn, down 23% YoY. India business reported healthy EBITDA adjusted for NHIC losses, up 15% YoY. 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. Our FY25E and FY26E EBITDA remains broadly unchanged.

Outlook

We maintain ‘BUY’ rating with a TP of Rs 1,420/share, based on 23x Sep’26E EV/EBITDA for India business and 12x EV/EBITDA for Cayman hospitals. At CMP, the stock is trading at 17.5x FY26E EV/EBITDA (adj for IND AS). Faster ramp-up of the Cayman unit will be key.