Buy Narayana Hrudayalaya; target of Rs 2000: Prabhudas Lilladher

Prabhudas Lilladher's research report on Narayana Hrudayalaya

Narayana Hrudayalaya (NARH) reported EBITDA of Rs3.4bn (up 11% YoY) in Q1FY26, 4% below our estimates due to losses at Cayman Integrated Healthcare business. The Cayman business reported profitability of Rs1.44bn (up 17% YoY), adjusted for CIHL losses, up 25% YoY. India business reported healthy EBITDA adjusted for NHIC losses, up 13% 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 ~1,935 beds expansion through greenfield and brownfield across Bengaluru, Kolkata and Raipur. Our FY26E and FY27E EBITDA stands marginally reduced by ~1-3%.

Outlook

We maintain ‘BUY’ rating with a TP of Rs2,000/share, based on 26x FY27E EV/EBITDA for India business and 20x EV/EBITDA for Cayman hospitals. We factor in 21% EBITDA CAGR for Cayman operations over FY25-27E and thereby higher target multiple for Cayman business. At CMP, the stock is trading at 22x FY27E EV/EBITDA (adj for IND AS).