India's hospital sector revenue to grow up to 20 pc in FY2027 from 18 pc in FY2026: Report

New Delhi, Dec 29 (IANS) The business outlook for the Indian hospital industry remains positive, with its revenue expected to grow 18-20 per cent in FY2027, a report said on Monday.

According to the report by credit rating agency ICRA, the sector’s growth, based on a sample set of 11 leading listed hospital companies, is supported by sustained high occupancy and healthy average revenue per occupied bed (ARPOB).

In FY2026, the Indian hospital sector grew 16-18 per cent, reflecting expectations of continued robust operating metrics on the back of strong structural tailwinds.

"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.

“ICRA expects occupancy of its sample set companies to remain robust at 62-64 per cent in FY2026 (63.5 per cent in FY2025), while the ARPOB is expected to expand by 6-8 per cent," she added.

This follows a strong first half, where the sample set witnessed a 16 per cent year-on-year revenue growth in H1 FY2026, supported by occupancy of 63.3 per cent and a 7.8 per cent increase in ARPOB, the report said.

The operating profit margin (OPM) in H1 FY2026 remained healthy at 23.7 per cent, aided by improved case mix and cost optimisation.

"Cost optimisation efforts along with an improving case and payor mix will support operating profit margin (OPM) of 22-24 per cent for the sample set companies in FY2026 (23.6 per cent in FY2025)," Macherla said.

ICRA noted that despite sizeable greenfield and brownfield expansions planned across metros, tier-II and tier-III cities, the credit profile of its sample set is projected to remain healthy, given the strong accrual expectations.

For the pharmaceutical sector, ICRA affirmed a 'stable' outlook for FY2026, projecting a 9-11 per cent revenue expansion 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," said Macherla.

"This will be supported by healthy growth of 8-10 per cent in the domestic market and 15-17 per cent in the European markets, while pricing pressure on certain key drugs such as Lenalidomide will result in moderation in the growth in the US market to 4-6 per cent," she added.

The operating profit margin (OPM) for the sample set is expected to remain stable at 24-25 per cent in FY2026, supported by healthy performance in key markets and stable raw material costs.

--IANS

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