Buy Narayana Hrudayalaya; target of Rs 1560: Prabhudas Lilladher

Prabhudas Lilladher's research report on Narayana Hrudayalaya

Narayana Hrudayalaya (NARH) reported EBITDA of Rs3.1bn (up 10% YoY) in Q3FY25, 9% above our estimates due to sharp ramp up in Cayman units. The Cayman business reported profitability of Rs1.3bn, up 8% YoY and 37% QoQ. 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 ~1,435 beds expansion through greenfield and brownfield across Bengaluru, Kolkata and Raipur. Our FY26E and FY27E EBITDA marginally increased by ~2%..

Outlook

We maintain ‘BUY’ rating with a revised TP of Rs1,560/share as we roll forward, based on 23x FY27E EV/EBITDA for India business and 12x EV/EBITDA for Cayman hospitals. At CMP, the stock is trading at 16.7x FY27E EV/EBITDA (adj for IND AS). Faster ramp-up of the Cayman unit will be key.

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