Narayana Hrudayalaya hits new high in weak market; surges 15% in 2 weeks

Narayana Hrudayalaya management remains confident that the new hospital will become a strong engine of growth in Cayman over the next few years.

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Shares of Narayana Hrudayalaya hit a new high at Rs 1,522, surging 5 per cent on the BSE in Monday’s intra-day trade in an otherwise weak market on expectations of healthy growth outlook. In the past two weeks, the stock of the hospital company has rallied 15 per cent. In comparison, the BSE Sensex was down 0.55 per cent at 72,796 at 11:22 AM.

 

In the past one month, Narayana Hrudayalaya has outperformed the market by surging 11 per cent, as against 5.7 per cent decline in the benchmark index.

 

Founded in 2000 by Dr. Devi Prasad Shetty and headquartered in Bengaluru, Narayana Hrudayalaya is one of the leading healthcare service providers in India, operating a chain of multispecialty, tertiary, and primary healthcare facilities. The company has a network of 19 hospitals and 2 heart centers across India along with overseas presence at Cayman Islands, with over 5,900 operational beds and a capacity of over 6,300 beds.

 

After a strong second quarter, Narayana Hrudayalaya delivered a steady performance across business units, in the third quarter of the fiscal year (Q3FY25), with a healthy year-on-year (YoY) growth, aided by strong growth in realizations. 

 

The Outpatient section of the new hospital was fully commissioned in December, while the Inpatient (IP) section will get commissioned phasewise. The management remains confident that the new hospital will become a strong engine of growth in Cayman over the next few years.

 

NH Integrated Care has delivered another strong quarter of increased patient transactions and revenue growth. The management said the company remains on track to delivering on its expectations for the full fiscal year for all businesses including the new ventures.

 

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, Narayana Hrudayalaya intends to add ~1,435 beds expansion through greenfield and brownfield across Bengaluru, Kolkata and Raipur.

 

In Q3FY25, Narayana Hrudayalaya reported earnings before interest, tax, depreciation and amortisation (Ebitda) of Rs 310 crore, up 10 per cent YoY, better than analyst’s estimates due to sharp ramp up in Cayman units. The Cayman business reported profitability of Rs 130 crore, up 8 per cent YoY and 37 per cent sequentially. India business reported healthy Ebitda adjusted for Narayana Health Integrated Care (NHIC) losses, up 15 per cent YoY.

 

Analysts at PL Capital maintained ‘BUY’ rating on Narayana Hrudayalaya with a revised target price of Rs 1,560/share as they roll forward, based on 23x FY27E EV/EBITDA for India business and 12x EV/EBITDA for Cayman hospitals, the brokerage firm said.

 

The greater maturity mix in hospitals, steady performance of its flagship hospitals in India and better profitability of new hospitals (SRCC, Gurugram, Dharamshala) have solidified the company’s position. Management iterated its capex plans and commitment to growing output over the next 3-4 years via debottlenecking and a better bed mix. Ahead, it intends to add ~1,435 beds (greenfield, brownfield) in Bengaluru, Kolkata and Raipur. However, operationalising new hospitals, which would account for most of its growth, could pose a risk to margins, analysts at Anand Rathi Share and Stock Broker said.  The brokerage firm has a ‘Buy’ rating on the stock with a target price of Rs 1,550 per share.