Hospital chains to add 14,500 beds, spend up to Rs 32,000 crore by FY27, says ICRA

Hospitals

India’s hospital industry is set for major growth, with at least 13 players expected to invest up to Rs 32,000 crore by FY27 to add around 14,500 beds, ICRA said.

Occupancy rates are projected to remain resilient at 62–64 percent this fiscal, while average revenue per occupied bed (ARPOB) is expected to grow 6–8 percent in line with the 7 percent year-on-year increase seen in FY25.

Operating profit margins (OPM) are forecast to stay stable at 22–24 percent.

“Following a strong occupancy of 63.5 percent in FY25, the sector is expected to maintain momentum, driven by expanding insurance penetration and continued market share gains for organised players,” said Mythri Macherla, vice president & sector head, ICRA. “Structural factors such as rising lifestyle diseases, higher awareness and affordability, and preventive health check-ups will continue to fuel demand.”

Despite geopolitical headwinds impacting international patient inflows, especially from Bangladesh, ARPOB remained solid in FY25, supported by improved case and payor mix, annual price revisions and high-value procedures like robotic surgeries, it said.

Capex surge 

The planned bed additions represent a 26 percent increase over current capacity and are aimed at addressing unmet demand in underserved regions such as Nagpur, Lucknow, Ongole and Coimbatore.

Citing these aggressive expansion plans and The robust operating metrics, ICRA revised its outlook for the sector to “positive”.

The sector is also seeing increased consolidation through mergers and acquisitions, helping hospital chains diversify geographically and expand specialty offerings, it said.

Institutional investor interest has surged, buoyed by strong financial performance and growth prospects.

Despite the capital-intensive nature of the industry, ICRA expects debt metrics to remain healthy. It expects operating profit before depreciation, interest, taxes, and amortization (OPBDITA) at 2.4–2.6x by March 2026, up from 2.1x in FY25.

Return on capital employed (RoCE), long constrained by high gestation periods, is expected to remain between 13 percent and 15 percent in FY26, supported by improved performance of mature hospitals and turnaround of newer centres.