 "India's hospital industry to see 16-18% revenue rise in FY26: ICRA")
The Indian hospital industry is expected to witness a revenue growth of 16 to 18 per cent in financial year 2025-26 (FY26), on the back of strong structural tailwinds, according to credit rating agency ICRA.
Healthy occupancy and average revenue per occupied bed (ARPOB) are expected to support a “strong” industry performance, according to Mythri Macherla, vice president and sector head for corporate ratings at ICRA.
“The performance of the Indian hospital industry is expected to remain strong in FY26 on the back of healthy occupancy and average revenue per occupied bed (ARPOB),” Macherla said.
The agency expects occupancy of its sample set of 11 listed companies to remain robust at 62 to 64 per cent in FY26, against 63.5 per cent in FY25, while the ARPOB is expected to expand by 6 to 8 per cent.
This follows a strong first half, where the sample set witnessed a 16 per cent year-on-year (Y-o-Y) revenue growth in H1FY26, supported by occupancy of 63.3 per cent and a 7.8 per cent increase in ARPOB.
“The operating profit margin (OPM) in H1FY26 remained healthy at 23.7 per cent, aided by improved case mix and cost optimisation,” Macherla said.
Cost optimisation efforts along with an improving case and payor mix will support OPM of 22 to 24 per cent for the sample set companies in FY26 (versus 23.6 per cent in FY25), she added.
Credit profiles of its sample set of companies is projected to remain healthy despite sizable greenfield and brownfield expansions planned due to strong accrual expectations, ICRA said.
“Despite ongoing debt-funded capital expenditure, debt metrics for the sample set companies are expected to remain comfortably backed by healthy cash accruals,” Macherla said.
ICRA also expected the hospital industry to witness revenue growth of 18 to 20 per cent in FY27, supported by sustained high occupancy and healthy ARPOB.
Pharma outlook stable on domestic growth
The ratings agency projected a stable outlook for the pharmaceutical sector, due to domestic growth, a comfortable credit profile and strong liquidity position of major industry participants.
“Revenues of ICRA’s sample set of Indian pharmaceutical companies are expected to grow by 9 to 11 per cent in FY26,” said Macherla.
This will be supported by an 8 to 10 per cent growth in the domestic market, coupled with a 15 to 17 per cent rise in the European markets.
Pricing pressure on certain key drugs, such as Lenalidomide, is expected to result in moderation in the growth in the US market to 4 to 6 per cent.
“The operating profit margin (OPM) for the sample set is expected to remain stable at 24 to 25 per cent in FY26, supported by healthy performance in key markets and stable raw material costs,” the agency added.