Even as hospital companies continue to scout for assets to buy, the country is expected to see about 4,000 hospital beds added this year, says a report by rating agency, ICRA, of the companies it covers.

The aggregate occupancy for these hospital companies remain strong at 61 - 63 per cent in FY25 (as compared to 64.7 per cent in FY24), backed by sustained healthy demand for healthcare services, it said.

Debt metrics and RoCE

The hospital companies are expected to add over 4,000 beds and 3,400 beds in FY25 and FY26, respectively, said Mythri Macherla, Vice President and Sector Head (Corporate Ratings) with ICRA. “This cumulatively translates to 23 per cent of the existing capacity as on March 31, 2024. While the capex will be partly debt-funded, the debt metrics are expected to remain strong.... Further, even the return on capital employed (RoCE) is expected to remain stable at 14 per cent in FY25 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 in the recent past,” she said.

Overall, the rating agency estimates a revenue growth of 12-14 per cent for its sample set companies in FY25. Rising incidence of non-communicable lifestyle diseases, growing per capita spend on healthcare and awareness levels, increasing penetration of health insurance, and higher medical tourism volumes are expected to continue to support the business prospects of industry players going forward, the agency added.

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