Indian Hospitals To Witness 12-14% Revenue Surge in FY24: Report
The rating agency Icra has predicted a 12 to 14 per cent revenue jump for its sample set of hospitals in FY2024, surpassing even the strong performance of FY2023. India's hospital sector is fuelled by surging patient numbers and increased revenue per occupied bed. This momentum stems from the demand for healthcare services, with occupancy rates poised to remain at a robust 64 to 65 per cent.
Further, the report stated average revenue per occupied bed (ARPOB), a key indicator of financial health, is expected to climb by eight to 10 per cent year-on-year, despite already gains in FY2023. This upward trend is driven by a more favourable mix of payors, a broader range of medical specialities offered within hospitals, and annual price adjustments implemented by healthcare providers.
The report also stated that the expansion plans are in the pipeline and several companies are gearing up to add over 1,500 beds and 3,400 beds in FY2024 and FY2025 respectively, representing roughly 15 per cent of their existing capacity. These expansions signal unwavering confidence in the sector's growth trajectory.
Despite ongoing investments, credit metrics for Icra's sample set are expected to stay strong. The net debt-to-operating EBITDA ratio is projected to remain low, at around 0.3 to 0.4 times by 31 March 2024 and even with increased capital expenditure, moderate to 0.6 to 0.7 times by 31 March 2025. Return on capital employed (RoCE) is also expected to hold steady at 15 to 17 per cent.
According to the report, the sector's strong performance is attracting both mergers and acquisitions (M&A) and private equity investments. Many players are actively looking for inorganic growth opportunities to broaden their networks and strengthen their market position. This increased financial activity fuels optimism about the healthcare sector's future.
India's hospital sector is experiencing a golden age, propelled by rising demand, improved operational efficiency, and strategic expansion plans. With favourable credit metrics and growing investor interest, the sector is well-positioned for continued success in the coming years.
