BackThis healthcare stock is up 250% in 4 years; Prabhudas Lilladher sees 35% upside
Prabhudas Lilladher believes that healthcare stock may surge from ₹715 to ₹965 apiece levels in long term
PremiumMultibagger stock: Narayana Hrudayalaya shares are one of the multibagger stocks that Dalal Street has delivered in post-Covid stock market rebound. Even though this multibagger healthcare stock has remained sideways to negative for last one year, it has given near 250 per cent return to its long term investors in last four years. In fact, the stock witnessed huge buying interest by bulls after ushering in 2019. In this period, this healthcare stock has risen from around ₹200 to ₹715 apiece levels.
However, despite sideways to negative trend for last one year, Prabhudas Lilladher has given 'buy' tag to this healthcare stock. The brokerage believes that the stock may go up to ₹965 apiece levels in long term. Narayana Hrudayalaya share price today on NSE is around ₹715 per share, which mean the brokerage is expecting more than 250 per cent return from this healthcare stock.
Highlighting the fundamentals that may fuel Narayana Hrudayalaya share price rally, the brokerage says, "Narayan Hrudayalaya reported pre IND AS EBIDTA of ₹2.4bn, above our estimates (Rs2.1bn). Adjusted for St Lucia’s EBITDA loss of Rs.13mn in Q3, EBIDTA was up 3% QoQ and 50% YoY. Overall, margins improved by 430 bps YoY and 120 bps QoQ to 22.6%. India business continues to report strong EBIDTA of Rs1.6bn; up 6% QoQ and 58% YoY. Cayman reported EBIDTA of USD 11.5mn vs USD 12.5mn in Q2 and USD 10.1mn in Q3FY22. OPM was of 41.2%, down 270 bps QoQ."
The brokerage went on to say, "Revenue grew by 18% YoY (down 1% QoQ) to Rs11.3bn. ARPOB for India business was up 4% QoQ to Rs. 35,068/day aided by better payor mix. Discharges were higher by 10% YoY for India. Cayman revenues improved 13% YoY to $28.2mn (down 3% QoQ). Discharges were lower 17% YoY while OP volumes were up by 13% YoY for Cayman; ARPOB was up 10% YoY. Reported PAT was at Rs1.5bn (up 58% YoY). Net debt decreased by Rs.535mn to Rs2.1bn."
On suggestion to stock market investors in regard to Narayana Hrudayalaya shares, Prabhudas Lilladher said, "We expect growth momentum to sustain. The company plans to continue with its aggressive capex plan for next 2-3 years, guided by capex of Rs.10bn annually in FY23E and FY24E. More importantly capex spend would be towards its core and high performing regions such as Bangalore, Kolkata and Cayman. Maintain ‘BUY’ rating with a revised TP of Rs. 965/share (earlier Rs920/share), based on 20x FY25E EV/EBITDA for India business and 12x EV/EBITDA for Cayman hospitals."
The brokerage went on to add that at current market price, Narayana Hrudayalaya share is trading at attractive valuations of 13x EV/EBITDA (adj for IND AS) and 20x P/E on FY25E. Faster ramp up in new Cayman unit will be a key.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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