The Indian healthcare sector is set to grow in Q1FY25, with a projected 12.6% year-on-year (YoY) revenue increase driven by a 15% rise in hospital revenues and a 12% increase in diagnostics, per brokerage firm BNP Paribas Securities India Private Limited.
Key players in the sector, such as Apollo Hospitals Enterprise (APHS) and Fortis Healthcare (FORH), are highlighted for their projected performance. The report said both institutions are expected to achieve a 6% YoY growth in average revenue per operating bed (ARPOB). Apollo Hospitals maintains a stable 62% occupancy rate, while Fortis Healthcare aims to boost its occupancy by 100 basis points to 65%.
“We anticipate a steady quarter for our coverage of Indian healthcare services, with aggregate revenue growth of 12.6% YoY. Hospitals are the primary driver with a 15% increase, while diagnostics are expected to grow by 12%,” said Tausif Shaikh, Analyst at BNP Paribas.
The report also predicted a 150 basis point improvement in earnings before interest, taxes, depreciation, and amortisation (EBITDA) margins, primarily supported by hospitals.
APHS’s offline pharmacy business is projected to grow by 10% YoY, although its online ventures are expected to remain flat quarter-on-quarter (QoQ). Conversely, FORH is set to improve its EBITDA margin by 280 basis points YoY to 19.2%. In the diagnostics sector, companies like Dr Lal PathLabs (DLPL) and Metropolis Healthcare (METROHL), Shaikh anticipated patient volume growth and improved realisations. However, FORH’s diagnostic arm, Agilus, may face challenges due to weaker brand recognition post-rebranding.
The report maintains its positive outlook for the sector, keeping earnings estimates, target prices, and ratings unchanged. APHS and METROHL are identified as top picks, with strategic expansions and mergers promising growth opportunities.
While Shaikh identified potential risks, including delayed occupancy improvements and increased competition, the overall sentiment remained upbeat.
