Narayana Hrudayalaya's margin rebounds, but remains below last year's level
Sequential revenue growth outpaced expense growth, while higher interest and depreciation diluted the 73.01% year-on-year revenue increase.
Filed 30 Oct 2026, 18:49 IST · after market close · Narayana Hrudayalaya Ltd (NH)
Key takeaways
- Consolidated operating margin recovered 1.98 percentage points sequentially to 19.48% as revenue grew faster than expenses.
- Year-on-year profit growth was limited to 16.50% because expenses rose 84.50% against 73.01% revenue growth, while interest increased 128.87%.
- Other income contributed 14.31% of pre-tax profit, and the tax rate fell 7.96 percentage points sequentially to 12.29%.
Price around the results
Sequential margin recovery does not erase the year-on-year squeeze
Narayana Hrudayalaya reported consolidated Q2FY27 results after market close, with revenue growth of 5.98% over Q1FY27. Expenses grew 3.44%, allowing operating margin to recover 1.98 percentage points to 19.48%. Year on year, however, expenses grew faster than revenue—84.50% versus 73.01%—and margin fell 5.01 percentage points.
Higher financing and depreciation costs held back profit conversion
Interest expense rose 11.43% sequentially and 128.87% year on year, while depreciation increased 86.27% year on year. That kept pre-tax profit growth to 15.70% despite the sharp revenue increase. The sequential tax-rate decline of 7.96 percentage points supported net profit growth, while other income accounted for 14.31% of pre-tax profit, making earnings quality an important consideration.
Margin is recovering from Q1FY27 but remains below the prior-year peak
Operating margin improved from 17.50% in Q1FY27 after falling from 19.66% in Q4FY26, but it remains below 24.49% in Q2FY26. The latest 19.48% margin was also 1.34 percentage points below the 20.82% median for 38 healthcare peers that had reported the quarter. The pattern is recovery after the Q1 trough, rather than a return to the margin level seen a year earlier.
Management outlines a multi-year bed expansion while flagging UK weakness
Management said the company is targeting more than 7,800 beds by FY30. It also said a 215-bed HSR, Bangalore greenfield hospital and a 300-bed Raipur expansion are planned for FY28, while a 350-bed Rajarhat, Kolkata facility is planned for FY29 and a 350-bed South Bangalore facility for FY30. The company reported that its UK hospital business saw pre-IFRS EBITDA decline 41.7% sequentially and recorded a GBP 0.8 million loss at a new centre in Q2FY27.
No immediate market reaction; past result-day moves have skewed negative
The results were filed after market close, so there has been no reported market response yet. Across the last eight results reactions, the stock rose three times and fell five times; the median absolute move was 4.84%. Recent moves ranged from -5.95% to +14.53%, showing that the eventual reaction has not been consistently one-directional.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹2,844 cr | ₹2,684 cr | +5.98% | +73.01% |
| Other income | ₹49 cr | ₹35 cr | +38.50% | +104.84% |
| Expenses | ₹2,290 cr | ₹2,214 cr | +3.44% | +84.50% |
| Operating profit | ₹554 cr | ₹470 cr | +17.92% | +37.61% |
| Operating margin (%) | 19.48% | 17.50% | — | — |
| Interest | ₹97 cr | ₹87 cr | +11.43% | +128.87% |
| Depreciation | ₹163 cr | ₹156 cr | +4.40% | +86.27% |
| Profit before tax | ₹343 cr | ₹262 cr | +30.90% | +15.70% |
| Tax | ₹42 cr | ₹53 cr | -20.58% | +13.44% |
| Net profit | ₹301 cr | ₹207 cr | +45.29% | +16.50% |
| EPS (₹) | ₹14.82 | ₹10.20 | +45.29% | +16.51% |
Operating margin of 19.48% compares with a Healthcare sector median of 20.82% across 38 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Narayana Institute of Cardiac Sciences, Bengaluru performed South India's first percutaneous transcatheter tricuspid valve replacement and India's first TTVI on a 14-year-old.
- The Bengaluru institute performed 54 TAVIs and six hybrid percutaneous pulmonary valve implantations in Q2 FY27.
Guidance & outlook
- The company targets bed capacity of more than 7,800 by FY30.
Expansion
- A 215-bed greenfield hospital in HSR, Bangalore is planned for FY28 with project cost of ₹4,900 million.
- A 350-bed greenfield hospital in Rajarhat, Kolkata is planned for FY29 with project cost of ₹9,000 million.
- A 350-bed greenfield facility in South Bangalore is planned for FY30 with project cost of ₹8,000 million.
- The Raipur expansion will add 300 beds by FY28 at a project cost of ₹5,400 million.
New initiatives
- The company is digitising patient safety and experience as part of its ESG vision.
Problems & risks
- The United Kingdom hospital business reported a 41.7% quarter-on-quarter decline in pre-IFRS EBITDA in Q2 FY27.
- The United Kingdom business reported a new centre loss of GBP 0.8 million in Q2 FY27.
- The annual renewable electricity target was revised from 41% to 37% because one hospital was excluded from the reporting scope.
What to watch
- Whether operating margin can remain above 19.48% after the sequential recovery.
- Whether interest expense moderates from its 128.87% year-on-year increase.
- Whether the UK business improves from the 41.7% sequential decline in pre-IFRS EBITDA.