Prabhudas Lilladher has given Buy recommendation for Narayana Hrudayalaya with a target price of Rs. 810 in its research report issued on Aug 12, 2022
Prabhudas Lilladher’s research report on Narayana Hrudayalaya
NARH reported highest ever profitability in Q1 from its India biz which is sustainable. We see decline in Cayman profitability as blip and should recover from Q2. Our FY23E and FY24E EBITDA stands increased by 7% and 6%. NARH continues with aggressive capex plan across India and Cayman operations over next 2-3 years. This enhances growth visibility beyond FY24 however, in near term it may increase debt and impact return ratios.
We maintain a ‘Buy’ rating with TP of Rs. 810/share (earlier Rs773/share), based on 20x FY24E EV/EBITDA for India business and 16x EV/EBITDA for Cayman hospitals. At CMP, stock is trading at 16x EV/EBITDA (adj for IND AS) and 26x P/E on FY24E. We expect EBITDA CAGR of 21% over FY22-24E. Despite capex intensity going up, RoE/ RoCE will remain healthy at ~25% by FY24E.