Narayana Hrudayalaya Q4 Results Review - Ebitda Miss Led By India Business: Prabhudas Lilladher

Prabhudas Lilladher Report

Narayana Hrudayalaya Ltd. reported Ebitda at Rs 2.95 billion (up 7% YoY), 5% below our estimate. Cayman business continues to reported healthy profitability at Rs 1.2 billion; up 19% YoY. While India business reported muted profitability at Rs 1.8 billion; up 4% YoY led by higher losses in NHIC and lower IP volumes.

Narayana Hrudayalaya reiterates its aggressive capex plan mainly towards its core and high performing regions such as Bangalore, Kolkata and Cayman which enhances growth visibility.

Despite capex intensity going up, return on equity/return on capital employed will remain healthy at ~23%. Our FY25E and FY26E Ebitda stands reduced by ~3%. We maintain ‘Buy’ rating with a revised target price of Rs 1,335/share, based on 23 times FY26E enterprise value/Ebitda for India business and 12 times EV/Ebitda for Cayman hospitals.

At current market price, stock is trading at valuations of 18 times EV/Ebitda (adjusted for IND AS). Faster ramp up in new Cayman unit (operationalize from H1 FY25) will be a key.

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