homemarket Newsstocks NewsNarayana Hrudayalaya Share Price: Kotak Institutional Equities says book profits after 60% jump
Narayana Hrudayalaya Share Price: Kotak Institutional Equities says book profits after 60% jump
However, Kotak has raised its price target on the stock to Rs 1,000 from the earlier Rs 905, which still implies a potential downside from current levels.
Shares of Narayana Hrudayalaya have risen nearly 60 percent over the last 12 months and as a result, brokerage firm Kotak Institutional Equities has recommended investors to take advantage of the same and book profits in the stock.
The brokerage has downgraded its recommendation on the hospital chain to reduce from the earlier rating of add. Shares have risen 33 percent over the last three months and hit a 52-week high of Rs 1,077.15 on June 21.
However, Kotak has raised its price target on the stock to Rs 1,000 from the earlier Rs 905, which still implies a potential downside from current levels.
“At current price, Narayana's Subpar RoCE profile in India as well as expected future dilution due to ongoing elevated capital expenditure (capex) is adequately factored in,” Kotak said.
The brokerage expects a gradual improvement in the multispecialty hospital chain’s India average revenue per occupied bed (ARPOB), but added that it will remain lower than peers.
Additionally, it has also priced in a turnaround in loss-making facilities of the company along with an increasing maturity of its network, both of which will aid a sales and operating profit Compounded Annual Growth Rate (CAGR) of 13 percent and 15 percent respectively over financial year 2023-2026.
Kotak remains wary of any significant future overseas expansion that Narayana may carry out as it already expects capex intensity to remain elevated beyond financial year 2023.
However, the firm has raised Narayana's financial year 2025-2026 EBITDA estimates by 5-6 percent due to better traction across India and Cayman Islands.
For the March quarter, the hospital chain reported an operating profit of Rs 275.7 crore from Rs 175 crore in the year-ago quarter. EBITDA margin stood at 22.6 percent from 18.6 percent a year earlier.
Shares of Narayana Hrudayalaya are trading 2.1 percent lower at Rs 989.
First Published: Jun 28, 2023 12:27 PM IST
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