Highlights

  • Hospital sector to see a sharp rise in net income in FY24-26
  • Capcity to expand 3-10%: Jefferies
  • EBITDA to grow 14-21% during FY24-26

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India's hospital sector to grow in FY24-26 amidst anticipated capacity surge: Jefferies

Jefferies expect the EBITDA of hospitals to grow 14-21% during FY24-26 which will be driven by the rise in Average Revenue Per Occupied Bed (ARPOB). The new capacities to break even will take 6 to 18 months 

India's hospital sector to grow in FY24-26 amidst anticipated capacity surge: Jefferies

Jefferies has picked India's hospital sector as top growth sector which will see a sharp rise in net income from FY24-26. As per the report, Hospitals are gearing up for significant capacity expansion over the next 12 -15 months, projecting an increase of 3-10%.

Hospital Sector Expansion

The report mentioned that new bed additions in the upcoming fiscal years (FY24-26) will be an important factor which will drive growth. This is also expected to complement the rise in Average Revenue Per Occupied Bed (ARPOB) which in turn will increase the overall earnings growth trajectory.

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Meanwhile it has also attributed to an upcoming “lumpy” growth to the time it takes for new capacities to break even, ranging from 6 to 18 months. Operating leverage is expected to rise after the critical breakeven point is reached. Operating leverage is the expression of a company’s fixed costs as a percentage of its total costs. Capacity expansion initiatives like increasing bed expansions are fixed costs.

Jeffries anticipate the hospital sector to register a robust EBITDA growth of 14-21% during the fiscal years 2024-2026. This bullish outlook underscores the firm's confidence in the potential for significant returns within the healthcare investment landscape.


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