Narayana Hrudayalaya (NHL) is one of the leading private healthcare service providers in India with a strong presence in Karnataka and the Eastern region with while it is growing its presence is other parts of India as well.

Commenting on the above, Angel Broking said 'Currently, NHL’s operating margin is lower than its close peer Apollo Hospitals on account of lower realizations (focus on affordable healthcare) and has lower occupancy rates. Since the hospital business has longer gestation period, we expect the occupancy and overall profitability to improve over a longer period of time.'

'On the valuation front, at the upper end of the price band, FY2016E annualized EV/Sales multiple works out to 3.4x for NHL which is not at a significant discount to Apollo (which trades at 3.6x). Hence we have a Neutral view on the IPO from a short term perspective,' the broker said. 

'However, investors with a longer term investment horizon can subscribe to the issue considering that the company's performance is expected to be more favorable in the longer run as the hospital business entails a longer gestation period and takes time to perform at optimum levels,'' it added.

The company has a relatively light asset model with it owning just 1,613 out of its 5,442 operational beds. It has a strong brand name and is known for its clinical excellence and being an affordable healthcare service provider. It currently has 23 hospitals.

Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.