New Delhi: India’s private hospital sector is projected to post 14 to 15 per cent revenue growth in FY27, marking its fifth straight year of double digit expansion, supported by stable occupancy, improving realisations and a strong pipeline of new beds, according to an analysis by CRISIL Ratings.
The study, which assessed 98 hospitals representing nearly two thirds of the sector’s FY25 revenue base of about Rs.78,500 crore, indicates that growth is now being fuelled by structural demand for complex and specialised treatments, rather than residual post pandemic recovery.
Average revenue per occupied bed (ARPOB) is expected to increase 5–7 per cent to around Rs.52,200 in FY27, driven by a rising share of procedures in the following specialities like cardiology, oncology, neurology, gastroenterology and orthopaedics
These specialties now account for about 62 per cent of hospital revenues, up from roughly 59 per cent in the pre pandemic period, underscoring a sustained transition toward high acuity, higher margin care. A growing proportion of insured patients is also supporting stronger pricing realisations.
Even with a significant addition of beds, occupancy levels are expected to remain healthy at around 65 per cent, backed by rising chronic disease burden, greater affordability of procedures, expanding health insurance penetration.
This demand visibility, combined with operating leverage, is likely to keep sectoral EBITDA margins steady at 20–21 per cent, despite continued investment.
A notable shift has been the quicker stabilisation of new hospitals, now reaching break even within 12–18 months, compared with three to four years earlier. Chains are increasingly adopting a calibrated mix of brownfield expansion, select greenfield projects, acquisition of operational assets and this approach as allowed faster ramp up and earlier cash flow generation.
Capacity creation is accelerating, with over 10,000 beds expected to be added across FY26–FY27, nearly double the additions seen in the previous two years.
Expansion strategies have also tilted strongly toward organic growth, with the organic to inorganic mix shifting from 60:40 earlier to about 80:20, partly due to the limited availability of large acquisition targets.
Between FY24 and FY26, hospital operators completed acquisitions worth approximately ₹11,000 crore, adding around 4,300 beds, often at premium valuations for ready to operate facilities.
Capital expenditure for organic expansion is projected at around ₹13,000 crore in FY27, slightly higher than the estimated ₹12,000 crore this fiscal. Strong internal accruals are expected to fund most of this investment, limiting reliance on external debt.
According to the analysis credit metrics are expected to remain comfortable, with interest coverage at around six times and the debt to EBITDA ratio at approximately 1.7 times.
The analysis also mentioned that sustaining occupancy and ARPOB growth as new capacity comes online will be critical to maintaining momentum. Acquisition valuations and timely ramp up of facilities remain the key variables to watch as the sector enters its next expansion cycle.
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