Target: ₹1,456

CMP: ₹1,370.80

In Q3-FY24, Narayana Hrudayalaya reported earnings slightly below expectations, with revenue reaching ₹1,203.60 crore, a 6.7 per cent y-o-y increase but a 7.8 per cent q-o-q decline due to seasonality. EBITDA grew by 9.6 per cent y-o-y to ₹278.90 crore but decreased by 9.5 per cent q-o-q. The EBITDA margin expanded by 62 bps y-o-y but contracted by 43 bps q-o-q to 23.2 per cent, aligning with estimates.

APAT witnessed a 22.3 per cent y-o-y growth but a 17 per cent q-o-q decline to ₹188.10 crore. As of December 2023, the company operated 39 healthcare facilities with 5,646 operational beds.

NH is poised for strong growth from FY24 to FY26, supported by its diverse presence in India, particularly in Karnataka and Kolkata, and its expansion into new specialties, including ortho spine, neurosciences, GI sciences, and acute care. The company’s robust footprint extends to the Cayman Islands, where it anticipates the completion of a new multispecialty center. NH’s strategic allocation of high capex towards adding hospitals and clinics further solidifies its growth potential.

Valuing the stock at 20x FY26E EBITDA, the target price is set at ₹1,456, maintaining an Add rating.