If one is asked to determine what is more essential for the functioning of society—a financial business or a hospital—the choice would be obvious.
A life-saving profession would always be more valuable than any business. But when it comes to valuing the two in terms of quantity instead of quality, the choice may not be that obvious.
The same contradiction was raised by Zerodha founder and chief executive officer Nithin Kamath in a social media post. The post is now going viral online with mixed reactions from netizens.
Citing his meeting with Dr. Devi Shetty, the founder of Narayana Hospitals, Kamath questioned the valuation of the hospital chain.
“I recently had dinner with Dr. Devi Shetty, the founder of Narayana Hospitals. For those who don’t know him, he’s the one who figured out how to do open-heart surgery for a few hundred dollars when the same procedure costs a bomb in the US. Narayana has 18,000 beds across India, and if you ask most middle-class people in Bangalore about it, they’ll speak highly of it,” he said in the post on X (formerly Twitter).
With about 18,000 beds across India, Narayana Hospitals is a credible name when it comes to executing complex surgeries at affordable rates. Yet, it has a market capitalisation of about Rs 38,000 crore.
Kamath compared it with the significantly higher valuations of financial services businesses in India, including his own company.
“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 wondered.
Highlighting the importance of good medical services, he said that a hospital not only carries physical infrastructure but also endures enormous liability with thin business margins.
While Kamath himself acknowledged that he could not come to a clear take on the matter, his post has given some food for thought for market forces that determine the worth of a business.
