Buy Narayana Hrudayalaya; target of Rs 1950: Prabhudas Lilladher

Prabhudas Lilladher's research report on Narayana Hrudayalaya

Narayana Hrudayalaya (NARH) reported EBITDA of Rs3.6bn (up 23% YoY) in Q4FY25, 5% above our estimates aided by higher profitability across Cayman units. The Cayman business reported profitability of Rs1.7bn, up 39% YoY and 28% QoQ. India business reported healthy EBITDA adjusted for NHIC losses, up 18% 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 ~1,535 beds expansion through greenfield and brownfield across Bengaluru, Kolkata and Raipur.

Outlook

Our FY26E and FY27E EBITDA stands increased by ~3-4%. We maintain ‘BUY’ rating with a revised TP of Rs1,950/share, based on 25x FY27E EV/EBITDA (23x earlier) for India business and 20x EV/EBITDA (12x earlier) for Cayman hospitals. We factor in 24% EBITDA CAGR for Cayman operations over FY25-27E and thereby higher target multiple for Cayman business. At CMP, the stock is trading at 20x FY27E EV/EBITDA (adj for IND AS).