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Major capex drives likely in health care

A study of 144 hospital firms rated by Crisil shows significant bed additions being undertaken to capitalise on demand prospects

Sohini Das  |  Ahmedabad 

Major capex drives likely in health care

India’s Rs 4.8 lakh-crore delivery sector is likely to see drives in the coming fiscals. Large corporate hospital chains (with revenue of over Rs 400 crore) are likely to invest in adding capacity by 25 per cent between FY18 and FY19, entailing an investment of about Rs 5,000 crore, which is 50 per cent more than the annual average capex in the past three fiscals ended 2017, said a study.

“We foresee sector revenues growing at a strong 15 per cent annually over the next three fiscals (2018-20), led by rapid expansion in health insurance coverage through government-sponsored schemes,” the report said. The number of people covered by health insurance has nearly doubled to 420 million in the past three fiscals. feels that changing lifestyles, ageing population and increasing health awareness are the other drivers of demand.

A study of 144 hospital firms rated by shows significant bed additions being undertaken to capitalise on demand prospects. Besides corporate chains, small and medium hospitals would also follow suit, based on their ability to fund expansions, the report said.

“Hospital firms are likely to sustain their credit profiles despite large capex, backed by strong demand growth, stable cash flows from existing beds, and strengthening of business profiles through geographical diversification,” said Anuj Sethi, senior director, Ratings. Stable cash flows from mature beds (below five years) enable better absorption of gestation losses from newer beds.

First Published: Sat, November 04 2017. 23:49 IST
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