New Delhi: The Indian hospital business is set to maintain its robustness, with an aggregate occupancy of 61–63 percent in the financial year 2025, as per the research released by ICRA. This is primarily due to the sustained demand for healthcare services and the continuous market share gains for organised companies.
The growing rates of non-communicable lifestyle diseases, coupled with the rise in healthcare spending per person and awareness, are expected to significantly bolster the business possibilities for sector participants in the future.
The analysis anticipates a moderate growth of 4-6 percent in the average revenue per occupied bed (ARPOB) in FY2025, following an 11% expansion in FY2024. This growth is a positive indicator of the sector’s revenue potential.
Improving the speciality mix, better payor mix (focusing on cash and insurance patients), and annual price revisions by companies to offset cost inflation are expected to support the ARPOB growth for the sample set companies.
ICRA forecasts that the sample set companies will augment their capacity by adding 3,400 new beds in FY2026 and nearly 4,000 new beds in FY2025. This expansion represents about 23 per cent of the existing capacity as of March 31, indicating the sector’s growth trajectory.
“This cumulatively translates to about 23 per cent of the existing capacity as of March 31. While the capex will be partly debt-funded, the debt metrics are expected to remain strong, with total debt/OPBDITA for ICRA’s sample set companies as 1.0-1.2 times as on March 31, 2025,” said Mythri Macherla, Vice President and Sector Head–Corporate Ratings, ICRA.
The report estimates revenue growth of 12-14 percent for its sample set companies in FY2025. Improving operating leverage, coupled with continued cost optimisation and digitisation measures, is expected to support a healthy operating profit margin (OPM) of about 22-23 percent in FY2025. In FY2024, it was 23.1 percent.
“Even the return on capital employed (RoCE) is expected to remain stable at about 14 per cent in FY2025, supported by strong earnings. Many hospital companies also continue to scout for inorganic opportunities to expand their network. ICRA notes that private equity investments have also increased recently,” Macherla added.
The in-patient footfalls for sample set companies in FY2024 (barring Q3 FY2024, which witnessed moderation owing to deferrals of elective procedures during the festive season) remained healthy.
The strong revival in medical tourism, coupled with changing patient preferences towards large hospitals due to increasing insurance coverage, is expected to significantly aid in-patient footfalls for sample set companies.
The average length of stay (ALOS) in FY2024 stood at 3.4 days and is expected to remain low, backed by faster throughput of patients, which is also supported by technological advancements.
Further, medical tourism footfalls which expanded YoY by about 33 per cent in CY2023 are expected to exceed the pre-pandemic levels of 0.7 million (witnessed in CY2019) in CY2024.
The report highlights the positive impact of the government’s steps to extend the e-medical visa facility to nationals of 167 countries. This initiative is expected to significantly increase medical tourism footfalls going forward.
–IANS
