India’s private hospital industry is expected to record 14-15% revenue growth in FY27, marking the fifth consecutive year of double-digit expansion, according to a recent assessment by CRISIL Ratings. The growth outlook is supported by stable occupancy levels, better pricing realisations, and an expanding bed capacity pipeline.
The analysis, covering 98 hospitals that together account for nearly two-thirds of the sector’s FY25 revenue base of approximately ₹78,500 crore, indicates that the current momentum is being driven by structural demand for complex and specialised medical care rather than residual post-pandemic recovery.
Average revenue per occupied bed (ARPOB) is projected to rise 5-7% to around ₹52,200 in FY27. This increase is attributed to a higher share of advanced procedures across key specialties such as cardiology, oncology, neurology, gastroenterology, and orthopaedics. These high-acuity segments now contribute about 62% of total hospital revenues, compared with around 59% before the pandemic, highlighting a clear shift toward more specialised, higher-margin treatments. Improved insurance penetration is also aiding pricing strength.
Despite significant capacity expansion, occupancy rates are expected to remain healthy at nearly 65%, supported by a growing chronic disease burden, improving affordability, and wider health insurance coverage. Strong operating leverage and demand visibility are likely to keep EBITDA margins stable at 20-21%, even as hospitals continue to invest in expansion.
New hospitals are stabilising faster than in the past, reaching break-even within 12-18 months, compared with three to four years earlier. Operators are increasingly adopting a balanced strategy combining brownfield expansion, selective greenfield projects, and acquisitions of operational assets to accelerate ramp-up and cash flow generation.
Over FY26–FY27, more than 10,000 beds are expected to be added almost double the additions seen in the previous two years. Expansion plans are now more organically driven, with the organic-to-inorganic growth mix shifting from 60:40 earlier to roughly 80:20, partly due to the limited availability of sizeable acquisition targets.
Between FY24 and FY26, hospital companies completed acquisitions worth around ₹11,000 crore, adding approximately 4,300 beds, often at premium valuations for ready-to-operate facilities. Looking ahead, capital expenditure for organic expansion is projected at about ₹13,000 crore in FY27, slightly higher than the estimated ₹12,000 crore this fiscal year. Most of this investment is expected to be funded through internal accruals, limiting additional debt.
Credit indicators are projected to remain comfortable, with interest coverage at around six times and a debt-to-EBITDA ratio of about 1.7 times.
However, maintaining occupancy levels and ARPOB growth as new capacity comes onstream will be critical. Acquisition pricing and the pace at which new facilities ramp up are likely to be key determinants of performance as the sector enters its next phase of expansion.
