IHH eyes expansion in India post Fortis open offer, to add 2K beds by 2028

Analysts say IHH's play may include improving revenue per bed by lifting clinical mix

After completion of its mandatory tender offer in Fortis Healthcare and Fortis Malar Hospitals, Malaysian healthcare giant IHH Healthcare is aiming to add 2,000 beds in a bid to double down on value creation in India.

 

IHH, which is Asia’s largest multinational private healthcare provider, currently has over 5,000 beds across a combined network of 35 hospitals in 11 states. It has presence in over 10 countries, which include India, China, Malaysia, Singapore and Turkiye.

 

The company is eyeing to scale its footprint and remain on track to expand capacity by more than one-third to approximately 7,000 beds in India by 2028.

 

This comes after IHH had to wait for seven years for approval from the Securities and Exchange Board of India (Sebi) to proceed with its mandatory open offer to acquire a 26 per cent stake each in Fortis Healthcare and Malar Hospitals.

 

IHH had acquired a 31 per cent stake in Fortis through its subsidiary NTK in November 2018, but suspended the open offer for an additional 26 per cent after Japanese drugmaker Daiichi Sankyo filed a contempt plea against Fortis founders Malvinder and Shivinder Singh.

 

The deal was held up in court amid Daiichi Sankyo’s long-running dispute with the Singh brothers over its purchase of Ranbaxy Laboratories more than a decade ago.

 

“The completion of the Fortis open offer allows us to move decisively into the next phase of growth in India. This comes at a pivotal time as IHH undertakes a group-wide transformation to future-proof our business,” Prem Kumar Nair, group chief executive officer at IHH Healthcare, said.

 

The completion of the open offer also puts focus on whether IHH’s bed expansion would come via greenfield expansions by Fortis. The chain currently runs 33 healthcare facilities, including joint ventures, and operations and maintenance (O&M) facilities, with around 5,800 operational beds across India.

 

With the IHH deal in legal limbo, Fortis had been making smaller acquisitions over the past three to four years to expand its bed count, which were mostly brownfield expansions.

 

In the last three financial years, the Delhi-based hospital chain has added over 1,800 beds, with the company having 3,979 operational beds according to its investor presentation for Q2 FY23. Most of this expansion has come through capacity expansion in existing facilities.

 

“We are open to doing greenfield hospitals as well, and as and when some appropriate opportunity comes, we will certainly look at that,” Fortis MD and CEO Ashutosh Raguvanshi had said in the company’s earnings call for Q2 FY26.

 

However, according to analysts, IHH’s India strategy may be less about adding more beds and more about improving what it already owns.

 

Nirali Shah, analyst at the Ashika Group, told Business Standard that with the Fortis open offer completed, the focus shifts to execution, using Gleneagles’ strength in complex care to lift the clinical mix across Fortis’ larger network.

 

“This should support a steady rise in average revenue per occupied bed (Arpob) and revenues over the next 12 to 24 months, driven by higher-acuity procedures rather than pure volume growth,” she added.

 

Nair added that IHH aims to unlock operational efficiencies and elevate care delivery for patients across the country through strategic collaborations, including deeper synergies between Fortis Healthcare and Gleneagles Healthcare India.

 

IHH’s corporate site highlights 27 Fortis hospitals and six Gleneagles hospitals as the backbone of its India presence, with diversified specialties from oncology to organ transplants.

 

Calling India one of IHH’s most compelling growth opportunities, Ashok Pandit, group chief corporate officer at IHH, said that it will be supported by consistent volume growth and rising clinical complexity.

 

“Structural tailwinds, including higher incomes, broader insurance coverage and increasing demand for complex care, are driving sustainable revenue growth,” he added.

 

IHH said it is well positioned to meet the growing demand of patients seeking high-quality care and outcomes, backed by strong governance and continued investments in cutting-edge medical technologies.