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Structural story continues to boost Hospital results; major expansions on card

ICICIdirect Research 21 Nov 2025 DISCLAIMER

Combined revenues of 7 pan-India hospitals put together grew 14% YoY to ₹ 9662 crore whereas EBITDA grew 42% YoY to ~₹ 2372 crore.
We continue to like hospitals space as besides growing instances of non-communicable diseases requiring hospitalized treatments, we believe it is a theme of healthcare premiumization as patients seek quality healthcare in comfort environment.
Improving payor-mix (more private insurance covered patients and lower government scheme patients) has helped the companies to generate better ARPOB. The proportion of private insurance covered patients has gone up from 15% to ~40% in five years at the expense of government scheme patients (37% to 15%).
Similarly, better case-mix (higher number of critical surgeries such as organ transplants, complex cardiovascular surgeries, cancer treatments etc.) has helped the companies to generate better ARPOB as well as margins. Complex surgeries and procedures now account for ~25% of the overall procedures for these players as against ~15% last year.
Most of the new hospital assets inducted in the last 5-7 years are turning profitable, boosting the combined average ROCE which is now trending at 19% as against 9% in FY20.
With very less balance sheet stress and comfortable leverage position, these companies are entering into a new capex phase (+10700 beds additions over the next 2-3 years) which is a good ~50% expansion over the existing capacity.
Hospital performances continue to outperform the broader markets on a consistent basis and the trend is likely to persist, thus justifying the valuation premium.
Top Picks – KIMS – TP ₹875; Rainbow Children – TP ₹1870; Apollo Hospitals – TP ₹8840

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