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Occupancy level to sustain from last quarter- Hospital Q2FY23 Preview

ICICIdirect Research 11 Oct 2022 DISCLAIMER

What's buzzing?

 

A surge in elective surgeries and post Covid induced complications is expected to ensure continued growth momentum for the hospitals space. Lifting of travel restrictions is also likely to propel the international patient mix, touching almost pre-Covid levels. In addition, easing cost is expected to lead to a better margin performance. 

Context

 

Hospitals are structurally well placed with momentum expected to continue from a robust Q1FY23. The momentum is likely to be driven by sequential in-patient volume and, thus, higher In-patient conversion. 

Our Perspective

 

With pent-up demand in elective surgeries and improving maturity profile, hospitals are expected to show a sequential uptick performance in every aspect. Amid optical initiatives like tele-consultation, digital app based drives for treating patients at remote locations, zoning of patients besides higher focus on insurance/out of pocket payees, we expect the hospitals universe to maintain Q1FY23 performance trajectory. Maturing profile of hospitals, reduction in ALOS along with ramp up in occupancy and ARPOB levels have moved hospitals to a better margin profile. During Q2FY23, hospitals were operating at a normal occupancy level with a better mix of high end elective surgeries driving ARPOB levels for hospital chains. The I-Direct hospitals universe is expected to report a sequential revenue growth of 5.3% in Q2FY23 to Rs 8529.1 crore. EBITDA of the I-direct hospital universe is expected to increase ~20% QoQ to Rs 1308 crore. EBITDA margins are likely to grow 192 bps QoQ to 15.3%. On the companies’ front, Narayana Hrudayalaya is likely to post revenue growth of ~8% QoQ while Apollo Hospitals is likely to post ~7% QoQ revenue growth.

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