Buy Narayana Hrudayalaya; target of Rs 2000: Anand Rathi

Anand Rathi's research report on Narayana Hrudayalaya

Below our estimate (mainly losses at Cayman Integrated Healthcare), Narayana Hrudayalaya’s Q1 EBITDA was Rs3.4bn, up 11% y/y, 7% q/q. Highlights: a) Cayman reported Rs1.4bn profit (up 17% y/y), adjusted for losses, up 25% y/y; b) the India business reported healthy EBITDA adjusted for the NHIC losses, up 13% y/y. Management iterated its capex plan for 3-4 years; further, it would focus on de-bottlenecking and a better bed mix. In the medium term, it intends to add ~1,935 beds through greenfield expansions across Bengaluru, Kolkata and Raipur.

Outlook

We introduce FY28e and roll forward our valuations to H1 FY28. We maintain our Buy on the stock with a higher TP of Rs2,000 (Rs1,550 earlier) on 20x H1 FY28e EBITDA (Cayman) and 25x H1 FY28e EBITDA (domestic).