Posted on March 3, 2025, by Niftynews
Shares of Narayana Hrudayalaya have surged to a new high of Rs 1,522, rising 5% on the BSE in Monday’s intra-day trade. This rally comes amidst a generally weak market, with the BSE Sensex down by 0.55%. Over the past two weeks, the stock has surged 15%, a notable performance when compared to the benchmark index’s underperformance.
Why Narayana Hrudayalaya Shares Are Surging
Narayana Hrudayalaya, a leading healthcare provider in India, has witnessed significant growth in its share price, fueled by strong business performance and expansion plans. The stock has outperformed the market in the past month, gaining 11%, while the BSE Sensex declined by 5.7%.
Founded in 2000 by Dr. Devi Prasad Shetty, the company operates a network of 19 hospitals and two heart centers across India, in addition to an international presence in the Cayman Islands. Narayana Hrudayalaya has over 5,900 operational beds and a capacity of over 6,300 beds, positioning itself as a key player in India’s healthcare sector.
Business Expansion and Growth Plans
Narayana Hrudayalaya is expanding aggressively, with plans to add approximately 1,435 new beds over the next 3-4 years. This expansion will be carried out through both greenfield and brownfield projects in major cities like Bengaluru, Kolkata, and Raipur. The company’s strong growth is supported by its increasing patient transactions, revenue growth, and expansion of its facilities.
The company’s most recent achievement includes the full commissioning of the outpatient section at its new hospital in the Cayman Islands. Management remains confident that the Cayman business will become a significant growth engine in the coming years.
Q3FY25 Performance
In its third-quarter results for FY25, Narayana Hrudayalaya reported a 10% year-on-year increase in earnings before interest, tax, depreciation, and amortization (EBITDA), amounting to Rs 310 crore. The Cayman business showed particularly strong growth, contributing Rs 130 crore in profitability—an 8% increase YoY and a 37% increase sequentially.
Meanwhile, the Indian business also performed well, reporting a healthy EBITDA growth of 15% YoY after adjusting for losses from Narayana Health Integrated Care (NHIC). This steady performance underscores the company’s ability to scale its operations effectively and deliver solid financial results.
Analysts’ Recommendations and Target Prices
Despite the strong growth, analysts remain cautious on certain risks related to operationalizing new hospitals. While new hospitals are expected to drive most of Narayana Hrudayalaya’s future growth, they could potentially impact margins as the company ramps up these operations.
However, analysts are generally optimistic about the company’s outlook. PL Capital has maintained a ‘BUY’ rating on Narayana Hrudayalaya with a revised target price of Rs 1,560 per share. This target price reflects the company’s expected continued growth, driven by its strong hospital performance and the profitability of new hospitals like SRCC, Gurugram, and Dharamshala.
Similarly, Anand Rathi has a ‘Buy’ rating on the stock with a target price of Rs 1,550 per share. Analysts believe that the company’s aggressive capital expenditure plans and strong pipeline of hospital projects will continue to bolster its position in the market.
Narayana Hrudayalaya’s Acquisition Strategy
In addition to its expansion through new beds, Narayana Hrudayalaya is also moving towards strategic acquisitions. The company has announced its intention to acquire a Bengaluru-based orthopedic and trauma hospital, which will further enhance its market presence and service offerings. This acquisition is expected to strengthen Narayana Hrudayalaya’s position in the competitive healthcare market, complementing its existing facilities and expanding its reach in the orthopedic sector.
Management’s Confidence and Future Outlook
Narayana Hrudayalaya’s management remains confident about the company’s growth prospects, with plans to invest heavily in capacity expansion and new ventures. The focus on debottlenecking existing operations, improving bed mix, and enhancing throughput is expected to further drive profitability.
The company’s efforts to improve efficiency and scale operations are aligned with its goal of becoming a leading player in India and globally. The management has reiterated its commitment to delivering robust growth through strategic investments and operational improvements.
Conclusion
Narayana Hrudayalaya’s share price surge reflects strong market confidence in the company’s ability to deliver sustainable growth. With a focus on expanding its network, increasing profitability, and making strategic acquisitions, the company is well-positioned to continue its growth trajectory in the coming years.
Investors should consider the long-term potential of Narayana Hrudayalaya as it continues to outperform the market. However, they should also remain mindful of risks related to operationalizing new hospitals, which could impact margins in the short term.
