Article of the month
Reading the vitals
Key messages
Steady 10-11% revenue growth seen in fiscals 2023 and 2024
- Bed additions, healthy occupancy and maintenance of average revenue per bed occupied (ARPOB) to support growth
- Recovering demand for medical tourism and increasing insurance penetration augur well for the sector
- Large hospital chains to grow at a faster pace owing to stepped-up expansion plans
Operating margin to moderate 200-250 basis points (bps) to ~16.5%; remain higher than the pre-pandemic level
- Doctor/medical staff expenses, pre-operative costs to go up due to augmented bed addition target
- Small hospitals to see steeper decline in profitability compared with large hospital chains
Capex, including brownfield investments, to hit an all-time high
- Annual addition of ~3,000 beds seen in fiscals 2023 and 2024 compared with ~8,000 beds added during fiscals 2018-2022
- Total capex estimated at Rs 12,000–13,000 crore over fiscal 2023 and 2024; ~Rs 20,000 crore was spent in the past five fiscals
Credit outlook to remain ‘Stable’ despite high capex intensity
- Healthy cash accrual to limit material debt addition, keeping debt protection metrics comfortable
- Large hospital chains to see more bed additions, benefitting scale of operations
- Debt metrics of smaller hospitals to moderate, but remain adequate
Analytica