Shares of Narayana Hrudayalaya surged 9% to an all-time high of Rs 795 per share in intraday trade on Friday on a promising outlook. The company’s shares of providing medical and healthcare services surpassed the previous high of Rs 775 per share on April 5, 2022.

Analysts believe the hospital structure is good, and the momentum is expected to continue in the first quarter of fiscal 2023.

“The momentum is likely driven by consecutive hospital admissions and thus higher conversion rates for hospitalised patients. An important lever could be increased elective surgeries as pent-up demand persists, post-Covid-induced complications and more international patient portfolio,” said analysts at ICICI Securities.

Narayana Hrudayalaya’s revenue is probably to rise about 8% quarter-on-quarter to Rs 1,117 crore due to the continued appeal of elective surgery. The EBITDA margin is also likely to grow by 11 basis points to 18.7%, while EBITDA is expected to rise 8.7% sequentially to Rs 209 crore. However, the adjusted PAT is expected to decline by 3.7% QoQ to Rs 106 crore.

Meanwhile, in September, Narayana Hrudayalaya signed an agreement with Shiva and Shiva Orthopaedic Hospital to acquire its 100-bed orthopaedic and trauma hospital in Bengaluru for a low price of Rs 280 crore.

The acquisition will give Narayana Hrudayalaya access to trauma and orthopaedics within the Narayana Health City campus, which houses two flagship hospitals, the Narayana Institute of Cardiac Science, which focuses on cardiac science and Mazumdar Shaw Medical Centre, a multi-speciality unit.

While the acquisition looks expensive, analysts believe it will provide a full-service offering in Health City. Given the small size of the deal, they expect limited financial impact as the above acquisition is in line with the FY23 Capex guidance of Rs 1,000 crore.

“Narayana Hrudayalaya’s aggressive Capex plan in India and the Cayman business over the next 2-3 years will improve growth visibility beyond FY24. Also, the company’s ability to generate healthy margins/profitability in the new Cayman segment will be a key monitorable factor,” said Prabhudas Liladher, an analyst with a “buy” rating on the stock with a price target of Rs 810 per share.