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Target: ₹920
CMP: ₹751.45
We are increasing our FY24/25 EPS estimates by 3.7 per cent and 5.8 per cent as we factor in higher profitability from units in Health City, Bengaluru. Narayana Hrudayalaya’s (NARH) profitability across India and Cayman was strong in H1-FY23 (up 44 per cent y-o-y) and we expect this growth momentum to sustain. The company plans to continue with its aggressive capex plan for next 2-3 years (guided capex of ₹1,000 crore annually in FY23 and FY24.).
We expect EBITDA CAGR of 22 per cent over FY22-25. Despite capex intensity going up, RoE/ RoCE will remain healthy at about 25 per cent.
Operationally, Cayman’s business has been strong from the last two years. Post opening up of tourism, volumes continue to remain healthy. We expect current quarterly run-rate of $10-12 million EBIDTA to sustain. Commencement of Cayman’s new unit got delayed due to Covid and shortage of labour. However, it is expected to operationalise from FY25. The company will continue to explore opportunities in neighbouring Bahamas and Bermuda.
Among the existing mature units (other than flagship) in India, the company has no plans for divesting.
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