Buy Narayana Health; target of Rs 2500: Choice Institutional Equities

What happened

Choice Institutional Equities kept a BUY rating on Narayana Health with a target price of Rs 2,500, citing growth from its combined hospital, clinic and insurance network in India, better profit in Cayman and a UK turnaround.

Confirmed

Global impact / market context

The broker expects revenue, EBITDA (core operating profit) and APAT (profit after tax) to grow at annual rates of 22.3%, 22.3% and 29.5% over FY26–FY29E. Stronger earnings would support the Rs 2,500 target, so hospital expansion and UK integration are key profit drivers.

Analyst inference

The call relies on 20x EV/EBITDA, which means 20 times enterprise value divided by core operating profit, averaged over FY28–29E. Valuation was held even after EBITDA estimates were revised for UK integration, so forecast delivery, not multiple changes, must justify the target.

Analyst inference

What to watch

1. The report expects focused capacity expansion, disciplined capital allocation and operational efficiency to drive stronger earnings across India, Cayman and the UK businesses. Confirmed
2. Watch whether Narayana Health adds hospital capacity and integrates the UK business as planned, since the broker revised EBITDA estimates for that integration. Proposed
3. Track actual revenue, EBITDA and APAT against the 22.3%, 22.3% and 29.5% FY26–FY29E growth targets, because falling short would weaken support for the 20x EV/EBITDA valuation. Analyst inference

Evidence

• Original source link unavailable