Prabhudas Lilladher has issued a buy rating on Narayana Hrudayalaya with a target price of ₹2,350 per share, as reported in their research report dated August 04, 2026. The brokerage firm's recommendation comes despite the company's recent market performance, with Narayana Hrudayalaya shares dropping 5.18% to ₹1,924.80 following the Q1 FY27 results announcement. The target price is based on 25x EV/EBITDA for India business and 15x EV/EBITDA for international operations based on FY28E estimates, reflecting confidence in the company's long-term growth prospects.
Narayana Hrudayalaya delivered robust financial results for the quarter ended June 2026, with consolidated net profit rising 5.7% YoY to ₹207.30 crore compared to ₹196.65 crore in the corresponding quarter of the previous year. However, the profit declined 9.2% QoQ, reflecting seasonal factors and operational challenges. The company's consolidated operating revenue for FY26 grew 44.01% YoY to ₹7,896.04 crore compared to ₹5,482.98 crore in FY25, following the late 2025 integration of UK-based Practice Plus Group Hospitals. EBITDA grew 39% YoY to ₹4.7 billion, though this was 9% below analyst estimates due to headwinds in UK and Cayman business operations.
The company's sales performance was particularly impressive, surging 78.0% YoY and 3.5% QoQ to ₹2,683.60 crore in Q1 FY27 compared to ₹1,507.27 crore in Q1 FY26. As reported by Business Standard, this substantial revenue increase indicates strong demand for healthcare services and effective business expansion strategies implemented by the organization. The India business continues to register strong performance with 40% YoY EBITDA growth, demonstrating robust domestic market performance despite seasonally weaker first quarter conditions. The Cayman business maintained strong momentum with operating revenue of ₹551.40 crore, up 38.9% YoY, supported by the One Health insurance platform.
The company faced significant margin pressures with EBITDA margin contracting to 18.8% from 23.9% in Q1 FY26, despite EBITDA increasing 40.0% YoY to ₹505.20 crore. Total expenses rose 89.2% YoY to ₹2,213.90 crore, with employee expenses (excluding doctors) surging 145.3% YoY to ₹724.80 crore, other administrative expenses increasing 99.4% YoY to ₹647.80 crore, and doctors' expenses rising 33.9% YoY to ₹327.00 crore. The company faces margin pressure caused by salary inflation and talent retention costs for specialized doctors and nurses in India, along with geographical and operational integration complexities regarding the newly acquired Practice Plus Group in the United Kingdom. Prabhudas Lilladher expects profitability to improve across UK and Cayman as Q1 operations have been impacted by seasonality.
The management reiterated its aggressive capex plan and commitment toward growing throughput over the next 3-4 years through debottlenecking, refurbishment and better bed mix. In the medium term, NARH intends to add ~1,535 beds over the next 3 years through greenfield and brownfield expansion across Bengaluru, Kolkata and Raipur. As of June 30, 2026, net debt stood at ₹1,967.10 crore with a net debt-to-equity ratio of 0.42, indicating manageable leverage levels despite aggressive expansion plans. The company has expanded its footprint to three continents, establishing a substantial operational foundation beyond India and the Caribbean, currently operating 55 healthcare facilities with more than 5,900 operational beds and targeting 7,600 beds by FY30.
