Narayana Hrudayalaya | Market Cap Rs. 13,059cr
CMP Rs. 639 | FY23 EV/EBITDA ~17x
About the Company
Narayana Hrudayalaya Ltd. (NHL) operates a chain of multispecialty, tertiary and primary healthcare facilities. It was established by Dr. Devi Shetty, who has over 37 years of medical experience, in the year 2000. The Group, which originally focused on cardiac and renal sciences, expanded to additional areas of focus such as cancer care, neurology and neurosurgery, orthopaedics, and gastroenterology and was rebranded as “Narayana Health" in 2013.
NHL has a strong presence in Karnataka and eastern India, with an emerging presence in western, central and northern India. It has a network of 44 healthcare facilities, including 19 owned/operated hospitals, 2 managed facilities, 4 heart centres, 18 primary healthcare facilities and 1 hospital in Cayman Islands. It had 6,011 operational beds and capacity of 6,584 beds as of March 2022.
Industry Overview
India’s healthcare delivery market grew from Rs. 2.5trn in FY16 to Rs. 4.3trn in FY21 at a CAGR of 11-13% as per a CRISIL report. The growth slowed due delay in elective surgeries on account of COVID-19. However, growth is expected at a rate of 15-17% till FY25 as per the report.
The healthcare sector includes various industries such as hospitals, diagnostics, pharmaceuticals and medical devices. Hospitals have the highest contribution in the entire healthcare sector, contributing 61% of the total revenue in FY20.
India’s healthcare expenditure as a % of GDP stands at 3.5%, which not only trails developed countries like USA and UK but also developing countries such as Brazil, Nepal, Vietnam, Malaysia and Thailand. The bed density in India is 15 beds per 10,000 population, way behind the global median of 29 beds per 10,000 population.
Key Business Parameters
Revenue
The company’s revenue increased from Rs. 2,281cr in FY18 to Rs. 3,701cr in FY22 at a CAGR of ~13%. The growth in revenue was a combination of increase in number of operational beds, better occupancy and hike in ARPOB.
Average revenue per occupied bed/ day (ARPOB)
NHL’s ARPOB has grown from Rs. 22,158 in FY18 to Rs. 32,329 in FY22 at a CAGR of 9.9%. However, it is still one of the most affordable hospitals when compared to other multispecialty hospitals such as Apollo Hospitals (Rs. 45,327), Max (Rs. 59,000) and Fortis (Rs. 48,000).
EBITDA Margin
NHL has consistently been able to improve its EBITDA margin except for a drop in FY21 (due to COVID-19). The reason for improving EBITDA margins has primarily been the new hospitals maturing and turning profitable.
Management
Dr. Devi Prasad Shetty is the Chairman of NHL. He is a cardiac surgeon with over 37 years of experience. He established NHL in 2000. He also initiated the concept of “Micro Health Insurance Scheme” in Karnataka, which eventually led to the Karnataka government implementing the Yeshasvini Scheme, a micro health insurance scheme for rural farmers.
Dr. Emmanuel Rupert is the MD and Group CEO. He joined NHL in the year 2000. He has over 25 years of clinical experience and 10 years of experience as an administrator in healthcare delivery.