In a landmark move that signals India's growing presence in global healthcare, Narayana Hrudayalaya Ltd has made its boldest international leap yet with the acquisition of UK-based Practice Plus Group Hospitals for approximately ₹2,100 crore. This strategic acquisition not only marks Narayana's entry into the United Kingdom's healthcare market but also positions the company among India's top three healthcare providers by revenue.
The Acquisition Details and Financial Structure
The deal valued at about ₹2,100 crore (£183 million) will be settled entirely in cash, with the total outlay reaching £189 million after customary adjustments. The acquisition is being financed through a combination of £150 million in debt and the remaining funds from internal accruals, creating a robust financial structure for this international expansion.
Significantly, the transaction is being routed through Narayana's Cayman Islands operations, which provides a cleaner organizational structure for future overseas expansions. This approach demonstrates the company's strategic foresight in managing its international portfolio.
Strategic Rationale Behind the UK Move
Narayana's decision to enter the UK market comes at a time when the country's National Health Service (NHS) is experiencing unprecedented challenges. Waiting lists have surged from 4.57 million before the COVID-19 pandemic to 7.4 million by August 2025, creating massive opportunities for private healthcare providers to address the growing backlog.
The UK stands out as one of the few developed markets that permits international ownership of private medical assets, making it an ideal destination for Narayana's global ambitions. This acquisition serves as a natural extension of the company's international expansion strategy while simultaneously reducing its regional concentration risk.
The timing is particularly advantageous given the structural shifts in UK healthcare. NHS outsourcing has doubled from £9 billion in 2011-12 to £18 billion in 2023-24, indicating a fundamental change in how healthcare services are delivered in the country.
Understanding Practice Plus Group's Operations
Practice Plus Group (PPG) represents a significant foothold in the UK healthcare landscape. As the country's fourth-largest NHS healthcare service provider and fifth-largest private healthcare network, PPG operates 10 hospitals and surgical centers with a total capacity of 330 beds.
The company's service portfolio includes urgent treatment centers, diagnostic hubs, and specialized ophthalmology centers. What makes PPG particularly attractive is its revenue composition: NHS referrals account for 93% of its revenue and 99% of its case volume, providing remarkable stability through multi-year, evergreen contracts exceeding 10 years each.
PPG's specialty mix differs significantly from Narayana's traditional portfolio. Orthopedics dominates with 45% of revenue, followed by ophthalmology (12%), oral surgery (4%), general surgery (5%), endoscopy (5%), diagnostics (6%), OPD (13%), UTC (5%), and other services. This contrasts with Narayana's India business, where cardiac sciences contribute 33%, followed by oncology (16%), renal (9%), and neurosciences (8%).
Financial Impact and Growth Prospects
The acquisition promises substantial financial benefits for Narayana Hrudayalaya. On a full-year basis, the deal will boost Narayana's consolidated sales by 53%, taking revenue from ₹5,483 crore to ₹8,393 crore, including PPG's projected revenue of ₹2,900 crore.
PPG has demonstrated strong financial performance, growing revenue at a 12.5% compound annual growth rate over the last five years. The company maintains center-level Ebitda margins of approximately 17%, which aligns closely with Narayana's India operations.
Management expects the investment to achieve a return on capital employed of 20-22% by FY29/30, compared to Narayana's current RoCE of 17%. The positive impact from the acquisition is anticipated to materialize within approximately two years.
Operational Synergies and Growth Levers
Several factors position this acquisition for success. PPG's existing centers operate at utilization rates of only 50-55%, leaving significant room for volume scaling without major capital expenditure. This provides Narayana with immediate growth opportunities from day one.
The company plans to deploy its proprietary digital platform, Athma, across PPG's operations to streamline processes and improve patient throughput. This technology has already proven effective in enhancing efficiency across Narayana's India and Cayman businesses.
Looking ahead, Narayana aims to leverage its NHS-backed foundation to emerge as a leading private-pay healthcare provider in the UK. A shift toward Private Medical Insurance and self-pay patients could substantially improve margins, as PMI typically pays 20-30% more than the NHS for similar procedures.
Domestic Expansion Parallels International Growth
While making this significant international move, Narayana continues to strengthen its domestic presence. The company has outlined plans to invest ₹3,000 crore over the next three years to add approximately 2,000 beds across India.
This domestic expansion will focus on high-growth clusters including Bengaluru, Kolkata, and Raipur, featuring a phased build-out of mid-sized 150-250 bed hospitals. This parallel growth strategy ensures the company maintains its strong foundation in the Indian market while pursuing global opportunities.
From a valuation perspective, Narayana currently trades at a price-to-earnings multiple of 48 times, which aligns with its 10-year median of 49. The company continues to trade at a discount to peers such as Global Health (55), KIIMS (81), and Fortis (69), suggesting potential for valuation improvement as the benefits of this acquisition materialize.
The Narayana-PPG acquisition represents a strategic masterstroke that balances high-acuity, clinically intensive services in India with an asset-light, day-care model in the UK. This diversified approach reduces dependence on any single segment or geography, creating a more resilient and growth-oriented healthcare enterprise positioned for long-term success in the global healthcare landscape.
