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Business Overview:

NARH, headquartered in Bengaluru, is a leading multi-specialty healthcare provider focused on delivering affordable, high-quality tertiary and quaternary care. The company has a strong presence across India and international markets with a network of hospitals and heart centres, supported by advanced clinical capabilities in cardiac sciences, oncology, neurosciences and organ transplants. Its facilities emphasize high-volume care, technology adoption and cost-efficient delivery to improve accessibility and clinical outcomes.

Can the UK acquisition emerge as a significant long-term value creator for NARH?

The acquisition of Practice Plus Group (PPG) provides NARH with a scalable platform in a large developed healthcare market. Management aims to improve private payer mix and implement its technology stack to enhance efficiency and margins. While integration risks remain, successful execution could materially improve earnings and create a second growth engine outside India.

Can NARH replicate its Cayman success across larger international markets?

Narayana’s Cayman business has evolved into a highly successful integrated healthcare and insurance model, delivering strong revenue growth and profitability. Building on this success, the company is now leveraging its technology infrastructure, operational expertise and integrated care capabilities to expand into larger international markets, particularly the UK. Management believes its ability to improve efficiency, lower costs and optimize patient flows can be replicated across geographies. While growth rates in Cayman are expected to moderate as the business matures, international expansion provides a significant runway for growth, revenue diversification and enhanced earnings scalability over the long term.

Can NARH sustain strong margins despite an aggressive expansion pipeline in India?

India hospital EBITDA margins have steadily improved through higher case complexity, robotic surgeries, transplant volumes and operational efficiencies. While upcoming greenfield projects may create temporary dilution, management remains confident that technology-led productivity gains and better case mix will support healthy profitability over the long term.

Will Narayana’s India expansion strategy accelerate its next phase of growth?

NARH is entering a major growth cycle with nearly INR 3,000 crore of planned investments across key markets including Bengaluru, Kolkata and Raipur. Alongside hospital expansion, the company is rapidly scaling its clinic network and integrated-care ecosystem to strengthen patient acquisition and referral generation. With significant capacity additions expected over the next few years, the company is laying the foundation for stronger market share, higher patient volumes and improved operating leverage, creating a compelling long-term growth opportunity.

Why invest in NARH?

NARH offers a unique combination of industry-leading profitability, scalable integrated healthcare and insurance models, and a strong expansion runway across India and international markets. With technology-driven efficiency, rising case complexity, significant capacity additions, and value-accretive growth initiatives in the UK and Cayman, the company is well positioned to deliver sustainable earnings growth and long-term shareholder value.

Recommendation:

We currently have a ‘BUY’ rating on the stock with a target price of INR 2,500.

Key Risks:

* Execution risk on expansion: Possible delays or cost overruns in the INR 3,000 Cr capex pipeline and bed expansion could impact return ratios and margins.

* UK turnaround uncertainty: The UK business operates at structurally lower margin and may take longer than expected to improve profitability.

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SEBI Registration no.: INZ 000160131