Broker’s call: Narayana Hrudayalaya (Buy)

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Target: ₹2,145

CMP: ₹1204.75

Narayana Hrudayalaya Ltd (NHL) is one of the best trusted names in super specialty healthcare, having significant market share in cardiology, oncology and nephrology. Dominantly present in East and Southern India.

Elective surgery forms the major part of treatment at NHL. COVID induced delays is past now and hospital chain is witnessing fast normalizing of operations with levered operating efficiencies. Well poised to reap benefits of operating leverage and better capacity utilisation.

NHL boasts of a strong management pedigree and highest standards of corporate governance. We expect company’s profit to grow from ₹790 crores in FY’24 to about ₹1,406 crores by FY’27.

While NHL’s insurance segment is expected to be a long-term revenue and profitability driver, we have adopted a conservative approach by not factoring health insurance revenue into financial projections for the next three years while have factored in full operating and non-operating expenses.

The company is likely to compound its revenue and profitability at a CAGR of around 20 per cent over next 3 years. Management has guided for green field expansion of 550 beds which will be fully operational post FY’27, revenue and profits from it will commence in FY’28.