Nithin Kamath sparked discussion about market valuations after flagging industry-based discrepancies. The Zerodha cofounder noted that the acclaimed hospital chain Narayana Hrudayalaya had a lower market cap than his own company — despite the life-saving services it offered. The Bengaluru-based chain was established by renowned cardiac surgeon Devi Shetty in 2000.
“I recently had dinner with Dr Devi Shetty, the founder of Narayana Hospitals. For those who don’t know him, he’s the guy who figured out how to do open-heart surgery for a few hundred dollars when the same procedure costs a bomb in the US,” he began.
Kamath noted that the hospital chain maintained around 18,000 beds in India and held a strong reputation among middle-class patients. The Narayana Health hospitals are widely recognised for offering affordable, high-quality cardiac surgeries.
“There was one thing I kept thinking about over and over again after meeting him. Narayana’s market cap is around Rs 38,000 crore. Now compare that to pretty much any half-decent financial services business in India, and it’ll be valued more than that, including Zerodha. A brokerage, worth more than a hospital chain, that has probably saved hundreds of thousands of lives,” he added.
The Zerodha co-founder marvelled at the “strange world” within which companies now operate — with a hospital tasked with saving lives somehow worth less than “a platform for buying and selling stocks”. He noted that the current system values businesses that are “closest to money” at the highest levels, while “the ones doing the hard and essential things get priced like boring utilities.” Kamath wrote that the gap did not sit well with him, calling it an “odd” situation.
“I get the arguments. If you’re a fund manager/analyst, you can immediately explain it away using margins, capex, asset-light vs asset-heavy, and all that, and I’m not saying the market is wrong. But it’s still a strange world we’ve built…A hospital carries physical infrastructure, enormous liability, thin margins and the actual weight of keeping people alive. And somehow that’s worth less than a platform for buying and selling stocks,” he said.
According to a Reuters report from January, Narayana Hrudayalaya is currently planning to expand into select Western markets. Group Chief Financial Officer Sandhya J told the publication that the hospital chain was considering future forays into parts of the Caribbean, Europe and other developed markets. Narayana Health plans to export its low-cost healthcare model to new areas while scaling domestic operations. Narayana Health already has a facility in the Cayman Islands and acquired the UK’s Practice Plus Group Hospitals last year, facilitating its entry into the UK.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please consult a qualified professional before making investment decisions.