scorecardresearchNarayana Hrudayalaya's focus on new capex to bolster growth for the company
In the third quarter of the financial year 2023 (Q3), the consolidated total operating income was  <span class='webrupee'>₹</span>11,282 million as compared to  <span class='webrupee'>₹</span>9,598 million in the corresponding period of the previous year, reflecting an increase of 17.5% YoY and decline of 1.2% QoQ.

Narayana Hrudayalaya's focus on new capex to bolster growth for the company

Updated: 02 Mar 2023, 01:08 PM IST
TL;DR.

  • The company has a network of 20 hospitals and 4 heart centres across India and Cayman Islands with over 6,100 operational beds and potential capacity of 6,370 beds.

Founded in 2000 by Dr. Devi Prasad Shetty and headquartered in Bengaluru, Narayana Hrudayalaya Limited (NHL) is one of the leading healthcare service providers in India, operating a chain of multispecialty, tertiary and primary healthcare facilities. 

The company has a network of 20 hospitals and 4 heart centres across India and Cayman Islands with over 6,100 operational beds and potential capacity of 6,370 beds.

In the third quarter of the financial year 2023 (Q3), the consolidated total operating income was 11,282 million as compared to 9,598 million in the corresponding period of the previous year, reflecting an increase of 17.5% YoY and decline of 1.2% QoQ.

Consolidated EBITDA stood at 2,660 million, reflecting a margin of 23.6% as against 1,819 million in Q3 FY22, translating into YoY growth of 46.3% and QoQ degrowth of 3.2%.

Consolidated total operating income was 33,032 million for 9M FY23 as compared to 27,606 million in 9M FY22.

Consolidated EBITDA was 7,408 million for 9M FY23, reflecting a margin of 22.4% as against 5,032 million in 9M FY22.

Consolidated PAT stood at 4,333 million for 9M FY23, reflecting a margin of 13.1% as compared to 2,732 million in 9M FY22.

Narayana Hrudayalaya Operating Revenues
Narayana Hrudayalaya Operating Revenues

On the basis of an asset-rights approach, a commitment to affordability and confidence in the NHL's long term growth potential, we continue to remain optimistic.

Owned and operated hospitals remained the larger contributor, which accounted for 96% of the business mix followed by heart centres (4%).

Cluster wise breakup includes Bengaluru: 35%, Kolkata: 26%, Northern peripheral: 18%, Eastern peripheral: 10%, Western peripheral: 5%, Southern peripheral: 6% of the total revenue mix.

Payee profile was mainly driven by domestic walk in patients (45%), insured patients (27%), schemes (20%) and international patients (8%).

NH, Mysore, performed some cutting-edge & complex clinical procedures in the interventional radiology and GI sciences segments in the quarter such as TIPS procedure performed in view of Budd Chiari Syndrome and Hyperthermic Intraperitoneal Chemotherapy procedure. Laparoscopic Heller Cardio myotomy with Toupet Fundoplication was performed for achalasia cardia.

Capex Update

Totals spend was 6.8 billion for 9MFY23 which includes acquisition of Trauma unit. Another 3.2 billion is likely to be spent in Q4FY23. The company has guided for 10 billion capex in FY24. Of the total 20 billion capex planned over FY23 & FY24, 8 billion will be spent on the Cayman new unit, 2.3 billion towards brownfield capex and 5.5 billion towards maintenance capex.

Revenues from three new units (SRCC, Gurugram, and Dharamshila) were at 1.1 billion, 17% YoY growth, in Q3 while EBIDTA margin was at 9.3%.

Dharamshila and Gurugram have started contributing to profits whereas SRCC Mumbai has touched breakeven levels.

Bangalore's new Ortho facility acquired in October 2022 generated 30% EBIDTA in Q3.

Cayman discharges were lower from the last four quarters. Despite that, the company saw ARPOB growth due to increase in complex surgeries. It expects discharges to scale up as new therapeutic indications will be for offer.

The net debt guidance of NH is at 5 billion for FY24 (By end of financial year).

Narayana Hrudayalaya reported another quarter of strong EBITDA growth at 2.54 billion (up 45% YoY and 4% QoQ), 17% higher than our estimate, aided by India business EBIDTA at 1.6 billion (up 58% YoY and 6% QoQ).

We expect the growth momentum to sustain. The company plans to continue with its aggressive capex plan for next 2-3 years, guided by capex of Rs.10 bn annually in FY23E and FY24E. More importantly, capex spend would be towards its core and high performing regions such as Bangalore, Kolkata and Cayman.

Throughout the quarter, the contribution from foreign patient footfall was unaffected. Despite the holiday season, its Cayman operation was still able to contribute to the total performance. The management has guided that current gross margins are sustainable in the long run.

Shuchi Nahar is a Certified Research Analyst. She can be found on Twitter at @shuchi_nahar

Note: This article is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment related investment-related decision.

What is EBITDA
What is EBITDA
First Published: 02 Mar 2023, 01:08 PM IST