Indian Hospitals to Add 10K Beds : Indian Private Hospitals Set to Expand Capacity by 10,000 Beds by Next Fiscal Year, 6,000 Added in FY25: Report

New Delhi, Feb 28 (NationPress) Private hospitals in India have expanded their capacity by approximately 6,000 beds in the current fiscal year, as reported on Friday.

The analysis conducted by Crisil Ratings, focusing on 91 private hospitals, indicates that this will be succeeded by an addition of 4,000 beds in the next fiscal year, with an investment of Rs 11,500 crore. Altogether, the 10,000 beds will match the number added from fiscals 2020 to 2024.

“With occupancy rates nearing 65-70 percent and ongoing demand for quality healthcare, private hospitals are investing around Rs 25,000 crore this fiscal and the upcoming one, which is nearly 80 percent higher than the average annual investment made in the preceding four fiscals,” stated Anuj Sethi, Senior Director at Crisil Ratings.

“Approximately 75 percent of the capital expenditure will be sourced from internal accruals. Additionally, robust return metrics have attracted significant investments ranging from Rs 55,000 to 60,000 crore from private equity and equity markets since fiscal 2022,” he added.

Currently, private hospitals generate about 63 percent of the sector's revenue in India. From fiscals 2020 to 2024, these hospitals experienced a compound annual growth rate (CAGR) of around 18 percent in revenue, coupled with strong operating profitability of approximately 18 percent, ensuring healthy cash flow, as per the report.

“The impressive performance and the comparatively limited bed capacity per capita in India relative to developed and emerging nations have driven substantial investments through private equity and initial public offerings (IPOs). This has bolstered balance sheets and empowered hospitals to pursue ambitious bed additions without significantly impacting their credit profiles,” it noted.

Moreover, half of the new beds will emerge from greenfield expansions, indicating a significant investment in new healthcare infrastructure. Around 40 percent will focus on brownfield development, aimed at modernizing and optimizing existing facilities.

The remaining 10 percent will stem from large players acquiring under-construction hospitals and small to mid-sized hospitals, enhancing organic growth initiatives, as per the report.

“The substantial proportion of greenfield expansion introduces risks concerning timely completion and occupancy ramp-up. However, since about 70 percent of these projects are located in metropolitan/Tier 1 cities, where hospitals achieve optimal occupancy and break-even within 12-15 months, the impact on profitability and associated return metrics is expected to be minimal,” remarked Naren Kartic. K, Associate Director at Crisil Ratings.

“Furthermore, recent equity raises have strengthened balance sheets, facilitating the absorption of capital expenditure debt without heavily affecting debt protection metrics,” he added.

Importantly, the interest coverage ratio and total debt to EBITDA—both crucial debt protection metrics—are projected to remain strong at around 8.0 times and 1.2 times, respectively. This reflects last year's performance and supports lending stability to credit profiles.

While the robust demand for quality healthcare is expected to maintain high occupancy despite the influx of new beds, the capacity of hospitals to sustain operating profitability and navigate regulatory changes will be critical to monitor moving forward, the report concluded.