ICICI Direct has given Buy recommendation for Narayana Hrudayalaya with a target price of Rs. 580 in its research report issued on Feb 08, 2021

ICICI Direct’s research report on Narayana Hrudayalaya

Continued sequential recovery in financial performance amid the pandemic was significantly better than expected. Revenues grew 24.9% QoQ to Rs 750 crore (down just 4.4% YoY) due to strong recovery seen across mature and new hospitals. On the EBITDA front, margins have already exceeded Q3FY20 levels by 90 bps (up 953 bps QoQ) coming in at a robust 14.0% amid lower employee and other expenditure. Subsequently, EBITDA grew 2.2%, 292.1% YoY, QoQ to Rs 105 crore. PAT for the quarter was at Rs 40.8 crore (up 30.1% YoY) against loss of Rs 3.4 crore in Q2FY21. Delta vis-a-vis EBITDA was due to lower tax outgo.

Outlook

We maintain BUY and arrive at an SOTP TP of Rs 580 (vs. earlier Rs 405) by valuing matured hospitals and Cayman Islands at 16x FY23E EV/EBITDA, new hospitals & other business at 1x FY23E EV/sales.

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