Q3FY21 Result Update - Narayana Hrudayalaya - ICICI Direct

Continued sequential recovery in financial performance amid the pandemic was significantly better than expected. Revenues grew 24.9% QoQ to Rs. 750 crore (down just 4.4% YoY) due to strong recovery seen across mature and new hospitals. On the EBITDA front, margins have already exceeded Q3FY20 levels by 90 bps (up 953 bps QoQ) coming in at a robust 14.0% amid lower employee and other expenditure. Subsequently, EBITDA grew 2.2%, 292.1% YoY, QoQ to Rs. 105 crore. PAT for the quarter was at Rs. 40.8 crore (up 30.1% YoY) against loss of Rs. 3.4 crore in Q2FY21. Delta vis-a-vis EBITDA was due to lower tax outgo.

Valuations & Outlook

Despite Covid-related challenges, the company posted a substantial improvement in operational performance. Also, in Decembers, the company's flagship centre revenues reached ~89% of pre-Covid (February 2020) levels. In view of significant near-term headwinds due to reduced overall occupancy levels amid Covid-19, the management has charted a path to reduce costs, increase efficiency and rationalise capex. New hospitals (SRCC, Gurugram, Dharamshila) continue to see a reduction in losses due to ramp up in occupancies. Notwithstanding Covid related impact, the improvement in numbers in the last few quarters is also on the back of judicious case mix identification (more focus on oncology, transplants and non-invasive procedures). We continue to believe in the long term prospects of the company on the back of asset-right model and affordability philosophy. We maintain BUY and arrive at an SOTP TP of Rs. 580 (vs. earlier Rs. 405) by valuing matured hospitals and Cayman Islands at 16x FY23E EV/EBITDA, new hospitals & other business at 1x FY23E EV/sales.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Narayana_Q3FY21.pdf

Shares of Narayana Hrudayalaya Ltd was last trading in BSE at Rs.460.7 as compared to the previous close of Rs. 459.65. The total number of shares traded during the day was 7176 in over 581 trades.

The stock hit an intraday high of Rs. 475 and intraday low of 459.25. The net turnover during the day was Rs. 3351357.

Source : Equity Bulls

Keywords