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Narayana Hrudayalaya: Q2 result beat across all fronts

News: Narayana posted strong numbers, better than our estimates across all fronts due to the business momentum revival across the hospitals. Revenues grew 9.4% QoQ to Rs. 940.3 crore. On the EBITDA front, margins improved 241 bps QoQ to 18% amid lower employee expenditure. Subsequently, EBITDA grew 26.3% QoQ to Rs. 168.9 crore. Adjusted net profit for the quarter was at Rs. 99.3 crore with 30.4% QoQ growth.

Views: With the effects of the second wave of the pandemic subsiding, Narayana’s Indian operations staged a decent recovery during the quarter. However, the profitability of flagship Health City, Bengaluru centres remain affected, as compared to the pre-Covid times, given the erosion in international patient mix as well as high-end cardiac sciences based elective work. New hospitals (SRCC, Gurugram, Dharamshila) continue to see a reduction in losses due to ramp up in occupancies. The improvement in numbers over the last few quarters is 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.