Narayana Hrudayalaya Stock Gains 3% As Kotak Securities Turns Bullish, Raises Target

Narayana Hrudayalaya shares moved higher on Monday, August 24, after Kotak Securities Limited turned more positive on the hospital operator, upgrading the stock to ‘Buy’ from ‘Add’ and raising its target price to Rs 2,350 from Rs 2,220.

The stock started the session at Rs 1,840 on the NSE, compared with the previous close of Rs 1,815.80. It went on to touch Rs 1,876 during the day. At the time of writing, the shares were trading at Rs 1,860, up 2.43%, while the Nifty 50 was down 0.26%.

The move comes after a period of weakness for the stock. Narayana Hrudayalaya shares are down around 5% over the past month and 4% so far this year. On a one-year basis, however, the stock remains up around 3%. The company has a market capitalisation of about Rs 38,009 crore.

Why Is Narayana Hrudayalaya Share Price Rising Today?

The upgrade is largely based on the strength of Narayana Hrudayalaya's core hospital business. Kotak Securities highlighted a 39% year-on-year increase in EBITDA from the India hospital segment, pointing to healthy patient volumes, operating efficiencies and tighter cost control.

According to the report, the domestic hospital portfolio is available at an attractive valuation. This has led it to take a more constructive view of the stock despite concerns surrounding the company's newer healthcare businesses.

One of the main concerns for investors has been the losses being reported by the integrated care and health insurance businesses. Kotak Securities, however, believes the market may have been too negative on the impact of these businesses on the company's overall performance.

The firm expects losses in the Indian integrated care business to reduce as the network expands and patient numbers increase. As these operations mature, the lower losses could gradually reduce the pressure on consolidated earnings.

Overseas Businesses Offer More Upside

Narayana Hrudayalaya's businesses outside India are also part of the research house's positive view. In the Cayman Islands, the company has recently increased prices, and Kotak Securities said the response from the market has been encouraging. The firm expects this to help the insurance business move towards profitability, with EBITDA breakeven projected by the end of FY28.

The UK operations are another area where the research house expects improvement. Higher capacity utilisation and better cost management are expected to support margins in the business.

For Narayana Hrudayalaya, the combination of strong growth in its India hospitals, a gradual reduction in losses from integrated care and improving performance overseas forms the basis for the upgraded view.

Narayana Hrudayalaya Share Price

Narayana Hrudayalaya shares were trading at Rs 1,860, up 2.64%, at the time of writing on Monday. The stock had touched an intraday high of Rs 1,876 after opening at Rs 1,840 on the NSE.

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