Narayana: Low-Cost Hospital Operator With Improved ROI Focus

Vinod Moras of Kiara Advisors presented his investment thesis on Narayana Hrudayalaya Ltd. (India: NARH) at Asian Investing Summit 2025.

Thesis summary:

Narayana Hrudayalaya is a leading Indian hospital chain founded by the renowned cardiac surgeon Dr. Devi Shetty, with a mission to deliver high-quality healthcare at affordable prices. Since going public in 2016, the company has evolved from a doctor-led institution into a professionally managed, ROI-focused healthcare platform under the leadership of Viren Shetty. With a network of 19 hospitals across India and operations in the Cayman Islands, Narayana has executed a successful transformation by optimizing its asset base, improving clinical efficiency, and expanding EBITDA margins from ~10% to over 22% in just five years.

The company recently traded at ₹1,683 per share, giving it a market capitalization of approximately ₹344 billion ($4 billion), which represents a notable ~27% discount to Indian hospital peers on an EV/EBITDA basis despite stronger operational metrics. Since 2019, Narayana’s revenue has grown 74%, EBITDA has tripled, net income has surged over 500%, and return on equity has expanded fivefold to 31%. This performance has been driven by better occupancy rates, rising average revenue per occupied bed (ARPOB), and increasing insurance penetration. With structural tailwinds in India’s underpenetrated healthcare system and rising middle-class demand, the company is well-positioned for continued profitable growth.

Looking ahead, Narayana is entering an expansion phase with plans to add over 2,000 beds by FY2030, focused on core geographies such as Bangalore and Kolkata. This capital expenditure, totaling INR 29 billion, is expected to be funded entirely through internal accruals. Optionality exists through its successful Cayman Islands operation — which boasts 41% EBITDA margins and a ROCE above 50% — as well as pilot initiatives in integrated health insurance and monetization of its proprietary hospital management software (Athma and Medha). These efforts not only open up new profit pools but also demonstrate the scalability of Narayana’s low-cost, high-quality care model in international and tech-driven settings.

Risks remain, particularly from regulatory pricing caps, wage inflation, and the capital-intensive nature of the hospital business. Moreover, about 30% of EBITDA is derived from a single overseas hospital in the Cayman Islands, introducing some concentration risk. However, with a solid balance sheet, strong management, and multiple growth levers, Narayana offers an attractive blend of proven execution and long-term optionality. As healthcare in India transitions toward organized, insurance-led delivery, Narayana is well-positioned to emerge as a blue-chip compounder in the making.

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About the instructor:

Vinod Moras is a seasoned value investor with over a decade of experience in Asian equities. He is currently an Investment Manager at Highwest Global Management, overseeing the firm’s India portfolio within its Asia-focused, long-only strategy. Previously, he was Head of Investments at Sixteenth Street Capital, leading research and portfolio strategy for South and Southeast Asia. Vinod also held investment roles at KIARA Advisors and APS Asset Management. Vinod brings operational experience to investing, having worked in the automotive and oil & gas industries before transitioning to finance. He has been a member of the Value Investors Club (VIC) and holds an undergraduate degree in engineering and master’s degree in finance from NYU Polytechnic Institute.