ICRA on Tuesday announced that it expects the hospital industry revenue to grow by 8-10 per cent in FY2024 due to rise in lifestyle diseases, increasing awareness and access to health insurance. Meanwhile, operating margin is estimated to be around 22 per cent, supported by cost optimization and operating leverage.

ICRA’s analysis covers the hospital business of nine listed companies: Apollo Hospitals Enterprise Ltd., Aster DM Healthcare Ltd. (Indian business only), Fortis Healthcare Ltd., Healthcare Global Enterprises Ltd., Krishna Institute of Medical Sciences Ltd., Max Healthcare Institute Ltd., Narayan Hrudayalaya Limited, Rainbow Children’s Medicare Limited, and Shalby Limited.

The ratings agency expects overall occupancy for its hospital industry sample set to remain strong at 60-65 per cent in FY14, based on last year’s 65.1 per cent. This is attributed to the continuous demand for healthcare services and the ongoing market share expansion among organized players. Given the higher baseline, average revenue per bed (ARPOB) is expected to grow at a moderate rate of 5-7 per cent for FY14, after a 10 per cent growth in FY13.

ICRA pointed out that the ARPOB increase for the sample set will be supported by “annual price revision by companies to improve specialty mix, focus on cash and insurance patients and reduce cost inflation”.

ICRA Assistant Vice President and Sector Head Maithri Macherla said companies in ICRA’s sample set have announced substantial expansion plans, supported by a sustained recovery in demand. “These include the addition of over 8,400 beds and an upgrade or refurbishment plan over the next four years.” “This represents an increase of more than 26 percent in capacity compared to March 2023 levels,” Macherla added. Furthermore, some of the major companies in the industry are exploring inorganic growth opportunities, thereby adding incremental beds through mergers and acquisitions.

During FY2023, patient numbers within ICRA’s screened subset showed a steady sequential improvement in all quarters except Q3 FY23, a period marked by the postponement of elective surgeries during the festive season . This positive trend is attributed to the resurgence of the medical tourism sector and increasing patient preferences in favor of larger hospital establishments, driven by expansion of insurance coverage.


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