Narayana Hrudayalaya Ltd. — Q3 FY26 earnings call

Call held 17 Feb 2026

Management summary

Narayana Hrudaya reported a strong Q3 FY26, particularly in its India business with significant profit growth and margin expansion, driven by strategic initiatives in the Bangalore cluster. International operations in Cayman showed hospital revenue growth but widening insurance losses, while UK operations are focused on integration and improving profitability. The company outlined its strategic vision for market presence and continued investment in technology and specialized services, while managing debt and capital allocation.

Highlights

  • India business achieved very high profit growth for the second consecutive quarter.

  • Margin expansion in India business was almost 150-200 basis points on a YoY basis.

  • Bangalore cluster experienced strong growth due to payor mix optimization and high-end robotic work, including cardiac surgeries.

  • Cayman hospital revenue reached $45 million.

  • Insurance business expanded its retail offerings to Kolkata, Raipur, and Mysore, and entered the SME market.

Concerns

  • Cayman insurance business saw widening losses sequentially this quarter.

  • Northern cluster in India experienced soft growth due to receivable problems with scheme payors and capping on drug reimbursements.

  • UK operations are still in the early stages of integration and profitability is significantly below India/Cayman, with the Birmingham unit still incurring losses.

What they filed

Q1 FY27: revenue up 78.1%, net profit up 5.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,367 1,335 1,475 1,507 1,644 +20%2,151 +61%2,594 +76%2,684 +78%
EBITDA309 307 358 337 401 +30%365 +19%508 +42%468 +39%
Net profit199 193 197 197 258 +30%127 −34%224 +14%207 +5%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • India Business
    — Profit Growth150 bps Margin Expansion
  • Cayman Hospitals
    45 Mn Revenue
  • Cayman Insurance
    — Losses
  • UK Operations
    8.5% EBITDA Margin (pre-IFRS)12% EBITDA Margin (post-IFRS)

Capital allocation

high confidence
  • Capex ₹3,000 Cr internal accruals and debt
    • General capex, including four Davinci robots and more oncology services
    Yeah, so there's a very quick question on INR 1000 crore capex to be funded. It will be internal accruals and debt. The number is actually closer to INR 3000 crore, but the answer is still the same.
  • Debt 2.5× EBITDA Maturity: 2+5 years repayment schedule for UK acquisition debt
    • New borrowing Debt taken for UK acquisition, with a 2+5 years repayment schedule. GBP 150 Mn
    I'll take this. We have taken debt GBP 150 million on this. I also want to take another question here, which is on the repayment of the debt. We have a 2+5 years repayment schedule over the period of which we aspire to repay this debt.
  • M&A Everhope Oncology Investment · Closed

    Focus on creating chemo centers in Delhi, with the first center in Gurgaon.

    This is an investment we made in Everhope Oncology, where focus areas are creating chemo centers in Delhi. The first center has come up in Gurgaon. They're scouting for more partners to open up more centers with.
  • M&A SSO Oncology (Surgical Service Oncology) Investment · Closed

    Investment in Mumbai-based surgical oncology with three existing centers and plans for expansion.

    The next investment they made is in SSO Oncology, Surgical Service Oncology in Mumbai. And they have three centers and they're looking to expand more.

Guidance & targets

Profitability

  • India Business Margins Profitability · next couple of quarters · Medium confidence maintain realized margins
    our efforts will always be to maintain these margins we've realized in the last couple of quarters, except for unknown short-term impacts.

    — Venkatesh R

  • Insurance and Clinics Breakeven Profitability · not specified · Low confidence achieve breakeven
    it's a little bit early for us to talk about breakeven on this.

    — Viren Shetty

  • Diluted impact from clinics Profitability · coming quarters · Medium confidence minimize diluted impact
    So, the diluted impact should minimize over the coming quarters.

    — Viren Shetty

  • UK Birmingham unit losses Profitability · within four quarters or one year · Medium confidence come out of losses
    we've always hoped that such an operation would take about four quarters or one year. It's been half that time.

    — Anesh Shetty

  • PAT growth Profitability · next financial year · Medium confidence follow EBITDA direction
    India will grow, Cayman will sustain, and UK we are looking to grow. So that gives you a direction of where our EBITDA is headed. PAT will follow the same direction.

    — Sandhya J

  • UK acquisition ROCE Profitability · medium term · Medium confidence not be dilutive to group ROCE
    UK will, in the medium term, not be dilutive to the group ROCE.

    — Sandhya J

Revenue Mix

  • Oncology and Cardiac Share of Revenue Revenue Mix · going forward · Medium confidence more than half of revenue
    We believe going forward, oncology and cardiac will account for more than half of our revenue going forward.

    — Viren Shetty

  • Oncology Revenue Growth Revenue Mix · depending on the years going forward · Medium confidence up possibly another 20%
    Our oncology could go up possibly another 20% depending on the years going forward.

    — Viren Shetty

Debt

  • Net Debt to EBITDA Debt · High confidence below 2.5
    We track the ratio of net debt to EBITDA on the consol basis. And our endeavor is to maintain a number below 2.5.

    — Nishant Singh

Revenue Growth

  • Like-to-like hospital growth Revenue Growth · before new hospitals commission · Medium confidence sustain double-digit revenue growth momentum
    The like-to-like hospital growth, we believe definitely should be able to sustain. There will be quarterly variations, barring any kind of major adverse events.

    — Viren Shetty

What to watch in Q4 FY26

India Business Margin Maintenance

next couple of quarters
Current 150-200 bps YoY expansion in Q3 FY26
Target Maintain realized margins

Why it matters

Sustaining margin expansion in India is crucial for overall profitability and reflects the success of transformation programs.

our efforts will always be to maintain these margins we've realized in the last couple of quarters, except for unknown short-term impacts.

Risks & concerns

  • UK operations profitability and integration challenges

    high

    Profitability is significantly lower than India/Cayman due to different market and risk profiles; integration is ongoing, and the Birmingham unit is still incurring losses.

    Management acknowledged

  • Competition in Bangalore market

    medium

    New hospitals are coming up in Sarjapur and North Bangalore, which could have short-term impacts on costs and breakeven for all players.

    Analyst acknowledged

  • Soft growth in Northern cluster (India)

    medium

    Caused by receivable problems with scheme payors, capping on drug reimbursements, and increased competition from newer hospitals.

    Management acknowledged

  • Volatility in Cayman insurance loss ratio

    medium

    Challenging to predict quarter-on-quarter due to large claims, leading to widening losses this quarter.

    Management acknowledged

Q&A highlights

5 direct, 1 evasive
Proforma Financials for Entities Partial
We are presenting relevant information in different segments. I think this is the model that we will continue with. However, if you have any specific questions on how to understand the numbers from our investor deck, you can set up time with our IR team and they'll be very happy to help you construct your entity wise P&L.

Analyst requested more granular financial reporting by entity, which management declined to provide directly, suggesting IR team engagement instead.

Asked by Rajit

North India Subsidiary Initiatives Evasive
Nothing that we can disclose as of now. But the North is an area of interest for us. And it's something that we're looking to see what we can do there.

Management confirmed a new subsidiary for North India but provided no details on its specific initiatives, indicating strategic secrecy.

Asked by Rajit

Bangalore Cluster Growth Drivers Direct
the transformation has given the results for us in mainly our flagships, where higher realizations have come out from the high level of beds. Of course, and that again, I'm repeating on the payor mix optimization which has consistently helped our flagships and including Bangalore cluster to work constantly on increasing realization.

Management detailed the specific operational and strategic levers (payor mix, robotic work, technology) that drove strong growth in the Bangalore cluster, providing insight into future growth strategies.

Asked by Nitin

Bangalore ARPP vs. Other Clusters Direct
Especially in robotic cardiac surgery, bone marrow transplants, all these are very large numbers here. ... In the last quarter, and in fact, past few quarters, we have done the largest robotic cardiac surgery in the country, largely from our Bangalore unit. Similarly, we continue to do the largest volumes in terms of bone marrow transplant, in terms of several advanced procedures. So that comes in at a higher realization.

Management explained that Bangalore's higher ARPP is due to a richer case mix, including advanced procedures like robotic cardiac surgery and bone marrow transplants, which are not as prevalent in other clusters.

Asked by Alankar

Competition in Bangalore Market Direct
There is enhanced competition. A lot of new hospitals are coming out in Sarjapur area and in North Bangalore. ... all competition has definite short-term impact in terms of enhanced cost and time to break even. But long term, it evens out because still all the organized corporate hospitals put together are barely able to service the true demand that exists.

Management acknowledged increased competition in Bangalore but expressed confidence in long-term demand, suggesting short-term impacts on costs and breakeven for new entrants.

Asked by Damayanti

Cayman Insurance Losses and Breakeven Partial
I think even when we spoke last quarter, like we said, it is quite challenging to have a quarter-on-quarter predictability in insurance loss ratio. There will be large claims and things like that. There'll be quite a bit of volatility. ... Now the focus will be on optimizing the book that we do have.

Management admitted to widening losses in Cayman insurance and volatility in loss ratios, shifting focus from aggressive expansion to optimizing the existing book, indicating a longer path to profitability than previously hinted.

Asked by Prithvi

UK Operations Profitability and Timeline Direct
every market will have its potential, we don't think that the profitability of what the operation in the UK will ever reach where we are in Cayman because they're very different markets, very different risk profile. ... the broad idea would be a much larger scaled version of what we've been able to do in Cayman, which is essentially implement our technology platform and other operational efficiencies, but at a larger scale.

Management clarified that UK profitability will not match Cayman due to market differences, and their strategy involves implementing technology and operational efficiencies similar to Cayman but on a larger scale.

Asked by Damayanti

UK Birmingham Unit Losses and Breakeven Direct
To your question about how long it will take to come out of our losses, we've always hoped that such an operation would take about four quarters or one year. It's been half that time. We will continue to monitor it.

Management provided a specific timeline of four quarters to one year for the Birmingham unit to break even, noting that half that time has already passed, offering a clear metric for future tracking.

Asked by Vinay Nadkarni

3 min read 6 chapters

Detailed narrative

India Business Performance and Strategic Initiatives

Narayana Hrudaya's India business demonstrated strong performance in Q3 FY26, achieving very high profit growth for the second consecutive quarter. This was accompanied by a significant margin expansion of almost 150-200 basis points on a year-on-year basis. The Bangalore cluster was a key driver, benefiting from payor mix optimization initiatives and increased volumes of high-end robotic cardiac surgeries and other advanced procedures, leading to improved realizations and revenue. The company plans to replicate this successful template across other clusters, including the eastern cluster, and address soft growth in the northern cluster by active marketing and optimization strategies over the short term.

International Operations: Cayman and UK

The Cayman Islands operations reported hospital revenue of $45 million. However, the Cayman insurance business experienced widening losses sequentially, prompting a shift in focus from aggressive expansion to optimizing the existing book through improved underwriting and operational processes. In the UK, the acquired Practice Plus business recorded an EBITDA margin of 8.5-9% (pre-IFRS) or 12% (post-IFRS), with a slight moderation in Q3. Management acknowledges that UK profitability will not match Cayman due to differing market profiles but aims to improve margins by implementing its technology platform and operational efficiencies on a larger scale. The Birmingham unit is targeted to break even within four quarters, with half that period already elapsed.

Capital Expenditure and Debt Management

The company's planned capital expenditure for FY26 is approximately INR 3000 crore, to be funded through a mix of internal accruals and debt. This capex includes investments in four Davinci robots to equip all hospitals for robotic surgery and expansion of oncology services. For the UK acquisition, GBP 150 million in debt and GBP 45 million in equity were deployed, with the debt having a 2+5 year repayment schedule. The company aims to maintain its consolidated net debt to EBITDA ratio below 2.5, indicating a prudent approach to leverage.

Strategic Vision and Growth Drivers

Narayana Hrudaya's long-term vision is to build a world-class healthcare institution providing accessible and affordable care. The strategy involves consolidating presence in core markets like Bangalore and Delhi, and growing in other successful markets such as Raipur, Ahmedabad, Jaipur, and Mumbai through a combination of hospitals, clinics, and insurers. The company aims for a significant presence in its core markets, ensuring an NH Centre (hospital or clinic) is within 25 minutes' reach. Oncology and cardiac services are expected to collectively account for over half of future revenue, with oncology potentially growing by another 20%.

Insurance Business Development

The company's insurance business has seen increasing acceptance and productivity, expanding its retail offerings beyond Bangalore to Kolkata, Raipur, and Mysore. It has also entered the SME market, providing integrated care solutions that include outpatient care, consultation, and medicines, in addition to hospitalization. While the insurance business is currently in a building stage and profitability is not yet substantial, management is optimistic about future growth, viewing the integrated approach as unique and resonant with the market.

Operational Efficiencies and Technology Adoption

A key focus for Narayana Hrudaya is improving in-hospital efficiencies through operational expertise, streamlining, cost cutting, and digitization. This approach aims to deliver world-class clinical service at competitive prices without compromising quality. The company is also leveraging technology, such as high-end robotic work, to enhance margins and realizations. The implementation of its technology platform and operational efficiencies, successfully applied in Cayman, is now being scaled to the UK operations to drive margin improvement there.

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