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Prabhudas Lilladher Report
Narayana Hrudayalaya Ltd. reported Ebitda of Rs 3 billion (up 12% YoY) in Q1 FY25, broadly in line with our estimates. Cayman business reported profitability of Rs 1.2 billion, up 11% YoY. India business adjusted for NHIC losses reported healthy profitability, up 17% YoY and 2% QoQ.
Narayana Hrudayalaya reiterates its aggressive capex plan, mainly towards its core and high performing regions such as Bengaluru, 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 broadly remain unchanged.
We maintain ‘Buy' rating with a target price of Rs 1,350/share, based on 23 times FY26E enterprise value/Ebitda for India business and 12 times EV/Ebitda for Cayman hospitals.
At current market price, the stock is trading at 17.5 times EV/Ebitda (adj for IND AS). Faster ramp-up in new Cayman unit (operationalise from Q2 FY25) will be key.
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