Buy Narayana Hrudayalaya, target price Rs 920: Prabhudas Lilladher

Prabhudas Lilladher has buy call on Narayana Hrudayalaya with a target price of Rs 583.The current market price of Narayana Hrudayalaya is Rs 757.5.

Narayana Hrudayalaya, incorporated in the year 2000, is a Mid Cap company (having a market cap of Rs 15467.05 Crore) operating in Hospitals & Allied Services sector.

Narayana Hrudayalaya key Products/Revenue Segments include Income from Medical and Healthcare Services, Medical Equipment and Other Operating Revenue for the year ending 31-Mar-2022.

Financials
For the quarter ended 30-09-2022, the company has reported a Consolidated Total Income of Rs 1172.80 Crore, up 12.61 % from last quarter Total Income of Rs 1041.43 Crore and up 23.14 % from last year same quarter Total Income of Rs 952.41 Crore. Company has reported net profit after tax of Rs 168.85 Crore in latest quarter.

The company’s top management includes Dr.Devi Prasad Shetty, Dr.Emmanuel Rupert, Mr.Viren Prasad Shetty, Dr.Kiran Mazumdar Shaw, Mr.Dinesh Krishnaswamy, Mr.Muthuraman Balasubramanian, Mr.Arun Seth, Mr.Subramanya Bangalore Nagappa, Ms.Terri Smith Bresenham. Company has Deloitte Haskins & Sells LLP as its auditors. As on 30-06-2022, the company has a total of 20 Crore shares outstanding.

Investment Rationale
The brokerage expects the company's EBITDA CAGR of 22% over FY22-25E. Despite capex intensity going up, RoE/ RoCE will remain healthy at ~25%. Hence, the brokerage retains its ‘BUY’ rating with a revised TP of Rs. 920/share (earlier Rs900/share), based on 20x Sept 2024E EV/EBITDA for India business and 15x EV/EBITDA for Cayman hospitals. At CMP, stock is trading at attractive valuations of 16x EV/EBITDA (adj for IND AS) and 25x P/E on FY24E. Faster ramp up in new Cayman unit will be key, noted the brokerage.

Promoter/FII Holdings
Promoters held 63.85 per cent stake in the company as of 30-Jun-2022, while FIIs owned 14.16 per cent, DIIs 13.71 per cent.