Hospitals to be top growth sector for FY24-26, says Jefferies
India's healthcare industry is poised for significant growth, with hospitals expected to see a considerable increase in capacity and net income, according to a recent Jefferies report. The study predicts a 3-10% expansion in capacity over the next 12-15 months, breaking away from the steady trend observed over the past three years. Jefferies's outlook highlights that new bed additions between fiscal years 2024-2026 will be a key factor driving this growth.
New bed additions to boost revenue
The anticipated bed expansion is set to boost Average Revenue Per Occupied Bed (ARPOB). However, this expansion is expected to be uneven, with periods of slower progress followed by rapid development. This "lumpy" growth pattern is due to the time required for new capacities to reach the breakeven point, which can take anywhere from six to 18 months. Once this critical point is achieved, operating leverage is expected to kick in, leading to a sudden and significant surge in growth.
Strong EBITDA growth of 14-21% during FY24-26
Jefferies expects their coverage universe, including the hospitals they track, to see a strong EBITDA growth of 14-21% during fiscal years 2024-2026. Recently, Max Healthcare Institute acquired Sahara Hospital in Lucknow for an enterprise value of Rs. 940 crore. In another deal, Aster DM Healthcare sold its Middle East or GCC (Gulf Co-operation Council) business to Alpha GCC Holdings Ltd. for around $1.01 billion (nearly Rs. 8,385 crore) and shifted focus to India operations.
