Narayana Hrudayalaya: The Robinhood of Heart Surgery 🏥

Imagine a world where only 2 in 100 can afford a life-saving heart operation. That's the harsh reality faced by 54 million heart disease patients in India. This is the mountain Dr. Devi Shetty, a cardiac surgeon who once served as Mother Teresa's personal physician, decided to climb.

Can his creation, Narayana Hrudayalaya (NH), truly revolutionize this crisis?

Let's decode the narrative of the "Robinhood of Heart Surgery."

What is the Narrative? From Rural Roots to Healthcare Empire

Born in a small village in Karnataka, Dr. Shetty’s ambition took flight after learning about the world's first heart transplant. This vision to provide affordable quality healthcare grew stronger as he returned to India and performed the first ever neonatal heart surgery (21 day old infant). His time serving Mother Teresa showed him the sheer scope of care needed. From these personal encounters, in 2001, he founded Narayana Hrudayalaya with a radical vision: world-class cardiac care, accessible to all, regardless of income.

The Business Model: Affordable Surgery, Sustainable Profits

NH's success lies in volume, efficiency, and cross-subsidization, allowing it to operate profitably while keeping prices low.

Let's illustrate this with an example:

• Premium Patients (20%): International patients/wealthier Indians pay Rs. 5-10 lakh for a bypass surgery.

• Subsidized Patients (80%): Farmers with Yeshaswini coverage, pay Rs. 1.5 lakh (covered by insurance and NH subsidies).

  
  

This is how NH makes it work:

• Lowering Operation Costs: NH's business structure relies on high volume to decrease expenses per procedure and improve surgeon expertise.

• Revenue Mix: NH's December 2024 Investor Presentation shows that 31% of revenues comes from walk-ins, while 17% comes from government schemes.

• Cross-subsidisation: This allows higher paying clients to allow NH to perform cheaper surgeries.

• Cost Management: NH also uses bulk procurement and technological efficiencies to further manage operation costs

  
  

The result? While Apollo Hospitals charges Rs. 10-15 lakhs for these surgeries, NH can do it for a 10th of that price and still be more profitable! Don’t believe it? Take a look!

Sure, NH has 6,000 beds while Apollo has almost double that, and is 30% of Apollo’s revenues, but the bottom line remains firm; High-Volume + Low-Cost = Sustainable Growth

Where Is The Narrative Headed?

Tailwinds:

1. Expansion: Adding 2,000+ beds. (NH's 2025 Investor Presentation highlights new hospitals coming up)

2. Digital Transformation: Telemedicine + AI = wider reach, lower costs.

3. International Growth: Leveraging the Health City Cayman Islands for global expansion.

   
   

Headwinds:

1. Regulation: Healthcare policy changes could impact profitability.

2. Labour Shortage: Recruiting/retaining skilled staff.

3. Competition: Growing competition in affordable healthcare.

   
   

Valuations

Since we have been comparing two hospitals, we must look at their valuations too, which stand at 20x 1-year forward EV/EBITDA for NH, while Apollo Hospitals trades at a 20% discount!

Even with fewer beds than Apollo, Narayana Hrudayalaya boasts a premium valuation, backed by its neat 27% ROCE (Apollo at 15%), and Dr. Shetty's unwavering mission translates to a valuation that reflects a conviction that has rewarded investors who see the market.

As Dr. Shetty once recounted, “When we started, people thought affordable heart surgery was impossible—now, with every new hospital and every life saved, the market is rewarding that conviction with a valuation that reflects both the impact and the immense runway ahead.”

Watch out for the Robinhood of Heart Surgery and the remarkable feats they achieve in the years to come.

Narayana n