India’s hospital industry is poised to maintain steady growth, with revenues expected to expand at a compound annual growth rate (CAGR) of 11–12 per cent, supported by rising health insurance coverage, increasing medical tourism, and sustained demand for healthcare services, according to CareEdge Ratings.
The rating agency noted that the sector’s long-term growth prospects remain strong due to structural factors such as low hospital bed availability, a growing burden of lifestyle and chronic illnesses, an ageing population, and improving insurance penetration across the country.
CareEdge highlighted that India’s cost-effective yet high-quality healthcare services continue to attract overseas patients. More than seven lakh medical tourists visited the country in 2024, making medical tourism a key contributor to hospital revenues. Treatment costs in India are estimated to be 60–90 per cent lower than in many other nations, reinforcing its appeal as a healthcare destination.
India is ranked among the world’s top 10 medical tourism destinations and remains the most preferred choice in Asia. Around 85–90 per cent of international patients travelling to India come from Africa, West Asia and neighbouring South Asian countries.
With limited scope for increased public spending on healthcare infrastructure, the private sector is expected to benefit the most from incremental demand. Corporate hospital chains, particularly listed players, have delivered consistent performance over the years. Although revenues dipped in FY21 due to the COVID-19 pandemic, lower occupancies and reduced average revenue per occupied bed (ARPOB) were temporary setbacks.
In the post-pandemic period, improving occupancy levels and stronger pricing have driven a sharp recovery. Hospital revenues have grown at a healthy CAGR of 15–16 per cent over the past five years, and CareEdge expects revenue growth of 10–12 per cent over the next two to three years, supported by ongoing capacity expansion.
The report also pointed to favourable utilisation and pricing trends. ARPOB has increased at an 8–9 per cent CAGR over the last five years and is projected to rise by 5–6 per cent annually in the near term, aided by an improved case mix and payor profile. Occupancy levels have stabilised at around 62–64 per cent despite continuous bed additions, supporting strong cash generation.
Financially, the sector has strengthened significantly. EBITDA margins have stabilised at 21–22 per cent, while net leverage has improved sharply from nearly 5.0 times in FY19 to about 1.4 times in FY25. Even with continued capital expenditure, CareEdge expects credit metrics to remain comfortable, backed by stable operations and resilient cash flows.
