In the past five years, the sector has clocked a healthy turnover of 16.5% and EBITDA CAGR of 26%, which reflects and improves the Fundamentals.
In 1qfy26, sales increased by 16% yo -y, powered by higher patient volumes and realizations per patient. The average turnover per occupied bed (ARPOB) grew by 9.5% JoJ, with a two -year CAGR of 7.4%.
The sector is expanding the capacity with a CAGR of 8%, with 14,000 new beds expected between FY25-27, an increase of 35% compared to FY25 levels. EBITDA -MARGES remain stable at 23%, supported by scale, improved case mix and strategic prices. Despite the pressure of new hospitals, EBITDA grew by 11% JoJ in 1qfy26.
Growth is fed by the increasing demand for urban and semi-urban health care, greater acceptance of private health care, specialized care penetration and supporting government policy. Insurance expansion, improvements of payers mixes and international inflow of patients also improve revenue quality.
Challenges include stable but slightly lower occupancy rate (59%) due to new capacity and weaker international inflow in the midst of geopolitical disturbances. New on behalf of hospitals can weigh on margins in the short term. They can no longer position strong expansion plans the sector for 20% yo-growing in operational beds in FY26. Combined with favorable demography and consciousness of health care, double digits appear to be sustainable for revenue growth and healthy returns for the next four to five years.
Apollo -Hospitals: Buy | Target RS 9,010
Apollo Hospitals (APHS) reported strong 1qfy26 results, with EBITDA/Pat increase 26%/42%yoj, estimates with 9%/13%. Growth was supported by lower operating costs, better leverage at AHLL and higher average turnover per patient (ARPP). Registrations (+21% YOY), active users (+55% JoJ), daily medical orders and consultations rose considerably. The cost optimization at Healthco is expected to improve profitability. Apollo also expands hospitals, scales diagnostics, optimizes pharmacy activities and merges Keimed distribution. These initiatives must send 15%/21%/28%CAGR in turnover/EBITDA/PAT above FY25-27.
Max Healthcare: Koop | Target RS 1,450
Max Healthcare (MAXH) achieved 1qfy26 turnover of RS 24.5B (+27% YOY) and EBITDA of RS 6.2B (+25% YOY), broadly in line. Pat on RS 3.7B (+20% yoj) missed estimates as a result of higher depreciation and load.
Growth was supported by an increase of 26% in occupied bed days, stable Arpob at RS 78K ( +1% JoJ) and a higher institutional share (21.8%, +390 BP Yoy). Basic hospitals delivered 13%/15%turnover/EBITDA growth, while Max Lab/Max@Home grew with 19%/22%.
We project 21%/22%/26%CAGR in sales/EBITDA/PAT above FY25-27, powered by Brownfield extends at Saket, Mohali, Luckknow and Gurgaon. While Vikrant project delays and rising net debt (RS 17.5B + RS 4-5B by FY26) are short-term challenges, the capacity and diversification support continuing profit growth.
(Disclaimer: recommendations, suggestions, views and opinions of the experts are their own. These do not represent the views of economic times)
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