Many of the companies dominating India’s stock exchanges today began as modest enterprises, far smaller than their current market capitalisations. For a business to rise from small-cap to the midcap league — which is home to the companies listed 101-250 on the bourses — it must deliver growth that consistently outpaces the broader market, since many other companies also keep moving higher as the market expands.
This week, we look at the trajectory of Narayana Hrudalaya: a chain of multi -speciality hospitals that provides affordable healthcare services to millions. What started in 2000 as a single hospital has grown into a network of 40 healthcare facilities with more than 5000 beds.
How it started
Narayana Hrudalaya (that trades under the name Narayana Health on the Indian stock exchanges) was set up in 2000 by Dr Devi Prasad Shetty with a simple but powerful mission: to deliver high-quality, affordable tertiary (speciality) healthcare to Indians. After establishing a successful cardiac model in the 2000s, the company diversified into multi-specialty hospitals during the 2010s, culminating in an IPO which formalised its transition to a public corporate entity. Post-IPO, Narayana Health has continued with expansion and acquisitions.
2000: Dr Devi Shetty launches Narayana Hrudalaya. First two hospitals opened in Kolkata (Rabindranath Tagore International Institute of Cardiac Sciences) and Bengaluru (Narayana Health City)
2008: Launch of heart centre in Dharwad. Launch of new hospitals in Jaipur and Jamshedpur.
2009: Launch of multispecialty Mazumdar-Shaw Health Centre in Narayana Health City, Bengaluru
2014: First international hospital in Cayman Islands established. New hospitals in Bengaluru, Raipur, Ahmedabad, Mysore, Shimoga, Durgapur, Guwahati. Acquires hospital in Barasat, Westbank Hospitals, and Westbank Health & Wellness Institute, Howrah. 2016: Lists on the Bombay Stock Exchange
2017: First paediatric hospital launched in Mumbai with SRCC Children Trust
2018: Partnership with Dharmashila Cancer Foundation and Research in Delhi
2019: Launch of operations in Gurgaon
2020: Launch of NH Healthcare app and virtual consultation platform
2022: Acquisition of Sparsh Hospital, Bommasandra. Launch of world-class orthopaedic facility at Narayana Health City, Bengaluru
Key growth drivers and success factors
Dr Devi Shetty’s business model has been about keeping costs low at his facilities, which he achieves by adjusting prices and salaries, pushing vendors for better deals, and striking smart partnerships.
Scale and process standardisation: Dr Devi Shetty believed that economies of scale help create a cost-effective healthcare model, and incorporated improvements that lowered the cost of medical attention and made it more widely available. Narayana Health’s operating model emphasises a high number of case volumes and tight process standardisation. Hospitals use a process called “task-shifting,” where responsibilities are distributed among trained technicians and nurses so that surgeons can focus only on performing operations. By reducing downtime between surgeries, this approach increases the number of procedures completed in the same time frame and minimises idle operating theatre hours. Task shifting, combined with procurement advantages, has helped the group lower the fixed costs per-case, making advanced procedures more affordable and accessible to a larger pool of patients.
Diversification: Starting with cardiac care, Narayana Health broadened its offerings and moved into oncology, neurosciences, nephrology and general tertiary services. It also pursued a two-pronged geographic strategy: high-utilisation centres in lower-cost locations to meet volume economics, and premium, multi-speciality hospitals in major cities to capture higher margins and brand visibility.
Insurance partnerships and hybrid pricing: To capture and retain patients, the group invested in insurance partnerships and concessional pricing. Cardiac care at Narayana Health is designed to be far more affordable than in most parts of the world, with costs kept uniform regardless of the complexity of the surgery or length of hospital stay. Nearly half of the patients pay subsidised rates, supported by micro-insurance schemes like Yeshasvini, which was launched in 2002 with the Karnataka government. Patients also receive concessions funded by the hospital’s trust, donors, and other support systems. To make this sustainable, Narayana Health follows a hybrid pricing model: while standard packages are kept low, a portion of patients can opt for upgraded “luxury” rooms with better amenities. The extra revenue helps offset the cost of treating those who cannot pay, ensuring that no patient is turned away for financial reasons.
Tech capabilities: The group invested in insurance partnerships, preventive screening centres, and digital tools such as EMRs and telemedicine. The company’s in-house Athma EMR + Medha/Aira AI tools automate documentation, labs, discharge summaries, and patient workflows, helping improve TATs and boost productivity gains to these platforms.
Capex efficiency: Listing on the public markets in 2016 provided a scalable capital source for larger hospital projects and strategic acquisitions. That financing flexibility has been important for taking on capital-intensive projects such as large multi-specialty facilities and “health city” style developments.
Narayana Hrudalaya today – and beyond
What began as a cardiac centre on the outskirts of Bengaluru has evolved over two decades into a multi-specialty hospital network that tapped operational engineering, volume economics and ambitious expansion to grow from a niche smallcap healthcare player into a publicly listed midcap institution. Today, Narayana Health runs a diversified network comprising hospitals, specialised heart centres and an array of primary and diagnostic facilities, with several thousand beds and operations spanning most major regions of India. The group continues to report efforts to optimise occupancy, improve operating margins and roll out preventive and tech-enabled care models to improve per-patient productivity.
Sources
Knowledge at Wharton: Narayana Hrudalaya: A Model for Accessible, Affordable Healthcare?
Aapka Care: The Story of Devi Shetty
The Spark January 2025: The Evolution of Healthcare Technology in India: A 20-year journey
Chola Securities: Narayana Hrudalaya
Narayana Health Annual Report 2025
Times of India: Narayana Health launches AI tool to ease doctors’ paperwork