Revenue of healthcare players to grow 10-15% in FY15

Revenues of most healthcare players are expected to grow 10-15 percent in 2014-15 due to addition of more beds, but overall profitability might be affected by a long break-even period and high manpower costs, says a report.

Credit profiles, especially of the standalone hospitals with recent bed additions, are likely to be stressed in FY15, according to India Ratings & Research (Ind-Ra).

Larger players with multiple hospitals would be better placed, its "2014 Outlook: Health Care" report has said.

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It said it has a stable outlook on the sector.

Growth will continue because of the wide gap between demand and supply, the report said, adding that the key drivers for demand will be increasing lifestyle-related health problems, the sector's immunity to economic cycles, improving health insurance penetration, increasing awareness and disposable income.

The growth is also likely to be boosted by government initiatives and increasing medical tourism

The industry is attracting investments towards health services like hospital beds and allied industries, Ind-Ra said, adding that majority of the investments in FY15 will continue to come from private sector.

It expects that the industry would get regulatory benefits.

The government has made important contribution to incentivise the investments in the sector through its insurance schemes, encouraging investments in public private partnership and also qualifying hospitals including medical colleges, paramedical training institutes and diagnostics centres for infrastructure lending, the report said.

These initiatives, it added, are likely to positively impact the occupancy levels and could also mean better lending terms in the form of concessional interest rates, longer moratorium and maturity, aiding in the capex plans of healthcare players.