The business outlook for India’s hospital sector remains positive, with revenues expected to grow by 18–20 per cent in FY2027, a report said on Monday.
According to a report by ICRA, the sector’s growth outlook, based on a sample of 11 leading listed hospital companies, is supported by sustained high occupancy levels and healthy average revenue per occupied bed (ARPOB).
In FY2026, the Indian hospital sector is estimated to have grown by 16–18 per cent, reflecting expectations of continued strong operating performance driven by favourable structural factors.
“The performance of the Indian hospital industry is expected to remain strong in FY2026 on the back of healthy occupancy and ARPOB,” said Mythri Macherla, Vice President and Sector Head, Corporate Ratings, ICRA.
She added that ICRA expects occupancy levels of the sample set companies to remain robust at 62–64 per cent in FY2026, compared to 63.5 per cent in FY2025, while ARPOB is projected to expand by 6–8 per cent.
The positive outlook follows a strong first half performance, with the sample set reporting a 16 per cent year-on-year revenue growth in H1 FY2026. This was supported by average occupancy of 63.3 per cent and a 7.8 per cent increase in ARPOB, the report noted.
Operating profit margins (OPM) in H1 FY2026 remained healthy at 23.7 per cent, aided by an improved case mix and continued cost optimisation.
“Cost optimisation initiatives, along with an improving case and payor mix, are expected to support operating profit margins of 22–24 per cent for the sample set companies in FY2026, compared to 23.6 per cent in FY2025,” Macherla said.
ICRA further noted that despite significant greenfield and brownfield expansion plans across metro, tier-II and tier-III cities, the credit profile of the sample set companies is expected to remain healthy, supported by strong accrual generation.
Separately, for the pharmaceutical sector, ICRA maintained a ‘stable’ outlook for FY2026 and projected revenue growth of 9–11 per cent for its sample set of companies.
“Revenues of ICRA’s sample set of Indian pharmaceutical companies are expected to grow by 9–11 per cent in FY2026,” Macherla said.
She added that this growth will be driven by healthy expansion of 8–10 per cent in the domestic market and 15–17 per cent growth in European markets. However, pricing pressure on certain key drugs, such as Lenalidomide, is expected to moderate growth in the US market to 4–6 per cent.
— IANS
