One of the multibagger equities that Dalal Street has given during the post-Covid stock market recovery is Narayana Hrudayalaya shares. Even though this multibagger healthcare company has been in a sideways to negative trend for the past year, it has nevertheless provided long-term investors with a return of about 25% over the past four years. In fact, after the new year, bulls showed a strong interest in purchasing the stock. This healthcare stock has increased in value during this time, going from roughly 200 to 715 per share.
However, Prabhudas Lilladher has rated this healthcare stock as a "buy" despite its sideways to negative trajectory during the previous year. According to the brokerage, the stock might eventually increase to values of $965 per share. Today's NSE share price for Narayana Hrudayalaya is about Rs. 715, which indicates that the brokerage expects this healthcare stock to return more than 250%.
The brokerage highlights the underlying factors that could support a rebound in the price of Narayana Hrudayalaya's shares "Pre-IND AS EBIDTA of 2.4 billion announced by Narayan Hrudayalaya was higher than expected (Rs2.1bn). EBIDTA was increased 3% QoQ and 50% YoY after St. Lucia's Q3 EBITDA loss of Rs. 13 million was taken into account. Margin improvement to 22.6% was 430 bps YoY and 120 bps QoQ overall. The Indian economy continues to post excellent EBIDTA of Rs1.6 billion, up 6% quarterly and 58% annually. In comparison to Q2's $12.5 million and Q3FY22's 10.1 million, Cayman recorded EBIDTA of $11.5 million. OPM was 41.2%, a 270 bps QoQ decrease."
The brokerage continued, "To reach Rs11.3bn, revenue increased by 18% YoY (down 1% QoQ). A higher payor mix helped the ARPOB for the India business increase 4% QoQ to Rs. 35,068/day. For India, discharges increased 10% year over year. Revenues in Cayman increased 13% YoY to $28.2 million (down 3% QoQ). While OP volumes in Cayman increased by 13% YoY and ARPOB increased by 10% YoY, discharges decreased by 17% YoY. PAT as reported was Rs1.5 billion (increased 58% YoY). Net debt fell by Rs. 535 million to Rs. 2.1 billion."
Regarding a recommendation to stock market investors regarding shares of Narayana Hrudayalaya, Prabhudas Lilladher stated, "We anticipate further growing momentum. The business intends to keep up its aggressive expenditure plan for the next two to three years, which would be driven by capex of Rs. 10 billion per year in FY23E and FY24E. The focus of capital expenditures should be on the company's core and top-performing regions, such Bangalore, Kolkata, and Cayman. Based on 20x FY25E EV/EBITDA for the India business and 12x EV/EBITDA for Cayman hospitals, the rating of "BUY" is maintained with a revised target price of Rs. 965 per share (formerly Rs920 per share)."
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