Shares of Narayana Hrudayalaya Ltd. fell 5.38% on Tuesday to close at ₹1,981.40, amid sharp profit booking driven by valuation concerns and weakening technical indicators. The decline comes after a strong year-to-date rally of over 60%, far outpacing benchmark indices.
Elevated Valuation Draws Caution
Narayana Hrudayalaya currently trades at a PE multiple of 51.69, compared to an industry average of 43.16. Its price-to-book value stands at 11.26, and PEG ratio at 1.16, reflecting rich valuations relative to earnings growth. Despite robust operating metrics—ROE of 31.5%, ROCE of 27.7%, and a modest D/E ratio of 0.50—investors appear to be reassessing positions as the stock enters technically overbought territory.
Performance vs. Broader Market
| Period | NH Return | Nifty 50 | Nifty Pharma |
|---|---|---|---|
| 1 Day | -5.38% | -0.35% | +0.32% |
| 3 Months | +17.43% | +9.09% | +5.53% |
| 1 Year | +62.05% | +5.51% | +11.75% |
The sharp divergence from broader indices adds to the thesis of short-term froth being corrected by market participants.
Weakening Delivery and Momentum Signals
A decline in delivery volumes supports the view of reduced long-term holding interest:
- Daily delivery volume (Jul 1): 318.4K vs. 5-day avg of 407.1K (-21.8%)
- Weekly delivery volume: down 33.1%
- Monthly volume: down 92.2% compared to 5-month average
Despite strong medium-term momentum scores (67–75/100), the recent 7-day and 7-week trends show a downward shift, confirming short-term pressure.
Financials Remain Solid
| Metric | Value |
|---|---|
| Market Cap | ₹40,846 Cr |
| EV | ₹44,361 Cr |
| Net Sales (Q4FY25) | ₹1,475.44 Cr |
| EBITDA | ₹357.72 Cr |
| PAT | ₹153.86 Cr |
The company continues to report consistent revenue and margin growth, underpinned by an asset-light model and expanding hospital network.
Outlook
The correction appears technical and valuation-driven, rather than fundamental. Unless broader sentiment deteriorates or valuations compress further, Narayana Hrudayalaya may find support near ₹1,950 levels. Investors should watch for recovery in delivery volumes and confirmation of support before reassessing entries.
Viraj Jain is an active stock market trader and technical analyst with a sharp eye for identifying trend-driven opportunities. Passionate about market movements and price behavior, he specializes in analyzing crucial support and resistance levels in high-momentum stocks. Viraj is dedicated to keeping fellow investors informed with timely stock updates, chart-based insights, and actionable technical analysis that bridges the gap between market noise and informed trading decisions.