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    Narayana Hrudayalaya Ltd.

    NH
    Healthcare·3 Nov 2025
    Management Summary

    Narayana Hrudayalaya announced the acquisition of the Hospitals division of UK-based Practice Plus Group, marking a significant international expansion. The company aims to leverage its operational efficiency and technology platform to improve the acquired entity's profitability and shift its payor mix towards private patients, targeting a 20-22% ROCE by FY29-30. While the acquisition is expected to be EPS neutral to mildly positive in the first year, full PBT benefits are anticipated within two years.

    Highlights

    5

    • Acquisition of UK-based Practice Plus Group Hospitals Limited, a strategic move into a stable, developed market.

    • Target ROCE for the acquired entity of 20-22% by FY29-30, indicating strong return expectations.

    • EPS expected to be neutral to mildly positive in the first year post-acquisition.

    • Strong operational alignment with the acquired company's management, focusing on efficiency and throughput.

    • Intention to increase the non-NHS payor mix from the current 93% NHS, offering significant growth potential.

    Concerns

    3

    • Initial discrepancies noted by an analyst regarding the acquired company's reported financials versus the company's deck, requiring clarification.

    • The integration of tech systems and full realization of benefits will be a journey, not an immediate one-time event.

    • PBT impact from the acquisition is expected to take approximately 2 years to turn positive due to the margin profile of other businesses.

    What Changed1

    vs Q3 FY26

    Guidance items10 → 7 (-3)
    Key financials

    Metrics

    7

    Periods

    3

    Headline

    5
    • Acquired Entity Bed Capacity
      330 beds
    • Acquired Entity Bed Utilization
      50%
    • Acquired Entity Manpower Cost (% of P&L)
      39%
    • Acquired Entity Depreciation
      8 Mn
    • Acquired Entity Net Assets
      30 Mn

    FY25, post-IFRS

    1
    • Acquired Entity EBITDA
      29 Mn

    FY25, pre-IFRS

    1
    • Acquired Entity EBITDA
      20 Mn

    Capital allocation

    4
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Debt

    Gross GBP 150 million

    Cost 6.0%

    M&A

    Practice Plus Group Hospitals Limited

    acquisition · signed · Consideration ₹NaN (mixed)

    Liquidity

    Liquidity disclosed

    Acquired target is sufficiently cashflow positive to take care of its own Capex requirements.

    Guidance & targets

    7
    CategoryTargetPriority
    Profitability
    Acquired Entity EBITDA (post-IFRS)
    GBP 29 million
    		High
    Profitability
    Acquisition PBT Impact
    Positive PBT impact
    		High
    ROCE
    Acquired Entity ROCE
    20%-22%
    		High
    EPS Impact
    Acquisition EPS Impact
    Neutral to mildly positive
    		High
    Payor Mix
    Acquired Entity Non-NHS Payor Mix
    Increase from 93% NHS
    		Medium
    Capex
    Acquired Entity Annual Capex
    GBP 10-20 million
    		High
    Operational
    Birmingham Centre Breakeven
    Breakeven
    		Medium

    Birmingham Centre Breakeven

    in a quarter or two
    CurrentStill in pre-commissioning phase, operating losses.
    TargetBreakeven

    Why it matters

    Indicates the operational ramp-up and profitability of a newer, key center for the acquired entity.

    We hope to update you and the rest of the followers maybe in a quarter or two once we get a better sense of where we are in that. Yeah.

    How to verify

    guidance_and_targets[metric='Birmingham Centre Breakeven']

    Risks & concerns

    4
    RiskSeverity

    Financial reconciliation discrepancies for the acquired entity

    Analyst Ravindra noted differences between public annual report figures and company's deck figures for the acquired entity's revenue and EBITDA, which management clarified were due to carved-out, diligenced financials. — Analyst acknowledged

    medium

    Healthcare worker shortage in the UK

    Analyst Shivam raised concerns about the UK's healthcare worker shortage; management stated private providers are more insulated due to service acuity and attractive workplaces. — Analyst downplayed

    low

    Integration challenges and timeline for technology systems

    Integration of core tech systems will take 'a couple of quarters, maybe longer,' with benefits flowing incrementally. — Management acknowledged

    medium

    Currency risk for the UK asset

    Analyst S. Ramesh mentioned currency risk in the context of manpower costs and ROCE targets, but management did not directly address it. — Analyst not addressed

    low

    Q&A highlights

    8

    “What we have given you, Ravindra, in our deck what we've given is the carved out financials that have been diligenced by our diligence partners and extrapolated for the full period. So, therefore, this is the number that we will be acquiring and integrating with our balance sheet. What you see in the public domain has, like Viren said, other than Hospital data also mixed up and, therefore, you will not be able to reconcile it. You should take the number we are presenting as the correct number.”

    Highlights initial confusion regarding the financial performance of the acquired asset and management's clarification on the basis of their reported figures.

    asked by Ravindra

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Entry into UK Healthcare Market

    Narayana Hrudayalaya announced the acquisition of the Hospitals division of UK-based Practice Plus Group, marking its second international expansion after Cayman Islands. The UK market is viewed as stable with a clear rule of law and a growing private healthcare sector, currently contributing only 16-17% of total health spend. This acquisition aligns with NH's long-term vision for multi-decade business scaling and operation in a developed country.

    02

    Acquisition Financials and Funding Structure

    The acquired Hospitals division reported a post-IFRS EBITDA of GBP 29 million for FY25. The acquisition is valued at GBP 150 million in debt, placed on the target's books, and GBP 40 million in equity funded from the Cayman balance sheet, making it a leveraged buyout. The company emphasized that the acquisition is on a debt-free basis, with the seller clearing existing liabilities, and the target is cashflow positive to cover its own capex of GBP 10-20 million annually.

    03

    Operational Strategy and Value Creation through Technology

    NH plans to replicate its successful operational efficiency and throughput-focused DNA, previously demonstrated in Cayman, to the UK entity. This includes infusing its proprietary Athma technology platform to automate processes and reduce human touchpoints, aiming for a leaner operation. Management noted a strong philosophical alignment with the acquired company's existing efficient management team, which operates at a 90-93% NHS payor mix with healthy margins.

    04

    Diversifying Payor Mix and Specialty Expansion

    A key strategic objective is to increase the non-NHS payor mix from the current 93% NHS dependency towards private medical insurance (PMI) and self-pay patients. While NHS payments are stable and inflation-linked, private payors offer 20-30% higher rates. The company also identified opportunities to expand services beyond the current Orthopedics, Ophthalmology, and General Surgery focus, leveraging existing infrastructure without significant additional investment.

    05

    Long-term Financial Outlook and Integration Timeline

    Narayana Hrudayalaya targets a Return on Capital Employed (ROCE) of 20-22% for the acquired entity by FY29-30. The acquisition is expected to be EPS neutral to mildly positive in the first year. While the full integration of core tech systems will be a phased journey over several quarters, the PBT impact on consolidated numbers is projected to turn positive within approximately two years, reflecting the long-term value accretion.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.