NH Q4 FY26 earnings call.
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Revenue
₹2,594 Cr
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Revenue YoY
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EBITDA
Pending
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Narayana Hrudayalaya reported another quarter of operational progress driven by complexity optimization and payer mix improvements in India. India hospital margins expanded to 25.1% from 21.5% YoY, supported by high-acuity procedures including ~100 robotic cardiac surgeries monthly and 160 percutaneous aortic valve replacements in Bangalore. The UK acquisition (Practice Plus Group) continues integration with normalized EBITDA margins at ~10% (acquisition was 7-8%), though ~200bps dilution from one-time costs brings normalized margin to ~22%. Cayman Islands insurance business reported a 110-112% loss ratio with $5M quarterly losses, though premium ramp-up exceeded expectations to $60M annualized. Management signaled sustained focus on India expansion with 3,000 crore capex plan through FY28-29, while emphasizing integrated care model combining hospitals, clinics, and insurance. Key risks include ongoing clinic cash burns (~66 crore FY26), high inflation absorbing operating leverage, and execution challenges across multiple expansion fronts.
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Guidance to track
- Total planned capex of 3,000 crore with 460 crore greenfield organic capacity, all projects expected to commission by FY28-29.
- Plan to double current 11 Bangalore clinics in FY27 while expanding to Kolkata, with cash burn expected to continue at similar run rates.
- Normalized margin base of ~22% with expectation to improve closer to market levels, though not to India/Cayman levels.
- Adding adult programs at SRCC hospital in Mumbai during FY27, currently in advanced discussions with trust for approval.
Risks flagged
- Despite earlier guidance suggesting Q1 FY27 break-even, management now expects another 1-2 quarters of similar loss levels. Loss ratio of 110-112% requires sustained premium increases and account purging.
- Clinic losses remained flat at ~66 crore in FY26 despite expectations of decline. New clinic ramp-up (18-month breakeven cycle) will sustain cash burns into FY27, requiring ongoing monitoring.
- IP volumes have stagnated while ARPOP growth compensated. Management attributed this to payer mix optimization but acknowledged need for volume recovery through clinics, digital marketing, and insurance channels.
- Multiple analyst questions (Rajit Agarwal, Shaswat Singh) highlighted inconsistencies between Q3 and Q4 UK P&L presentations due to reclassifications, month-end cut timing, and conversion rate catch-ups. Management deflected detailed explanations to offline calls.
Key quotes
- We are the only listed group that has not added a single bed from the time of listing and still been able to deliver revenue and margin growth because all our effort has been on improving the way how hospitals function.
- The whole idea behind the integrated care model is that the insurance helps drive steerage into the hospital and they work as a whole. So if you are going to see losses in the insurance business in isolation but contrast with very good growth in earnings and topline in the hospital business it does give a bit of a confusing picture.
- We will be demerging the clinic business into the core. But we've seen a lot of positive aspects of running these clinics. We are accessing patients domestically that historically would never consider coming to Narayana. We've generated a lot of inpatient referrals for fairly advanced therapies for the main hospital.
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