Based on the trends, Mythri Macherla, Assistant Vice President & Sector Head, ICRA, says, “Overall, revenue growth for the sample set in FY2022 is expected to be robust at 40 per cent plus. Benefits from improving scale and strong ARPOB levels, cost-optimisation efforts, and ancillary revenues from COVID-19 have supported margin improvement for industry players in FY2022. For the sample set, operating profit margin is expected to be between 20-21 per cent in FY2022. Further, given the robust accruals and relatively lower debt levels, debt metrics for the sample set have witnessed considerable improvement in FY2022. Given the strong demand for healthcare and continued patient preference for branded hospital chains, revenues and profit margins are expected to remain healthy for the industry going forward as well. However, given the large base of FY2022, revenue growth of the sample set is likely to moderate to a certain extent in FY2023.”
ICRA expects occupancy of its sample set to be 62-63 per cent in FY2022 and ARPOB to expand by 11-12 per cent. While occupancy is expected to slightly moderate in FY2023 given the ongoing capacity addition, ARPOB is expected to expand steadily going forward. Operating profit margins are expected to remain healthy in FY2023 as well given the continued focus on cost optimisation in addition to scale benefits.
Given the favourable demand outlook for the industry several large hospital players have recently announced sizeable capacity expansion plans across the country. Major cities/regions which will see bed additions over the next few years include NCR, Mumbai, Bangalore, Chennai among others. Industry players had slowed down their greenfield expansions during the last two-three years as the focus was on improving returns on existing facilities. This apart, with the threat from the pandemic seemingly over, players are now looking at adding bed capacity within their existing infrastructure, while some players have announced new greenfield projects. Some of the larger players are also actively scouting for inorganic growth opportunities. However, a key monitor-able regarding the funding pattern for the expansion plans remain. Further, timeline of these spends will also remain sensitive to the future waves of the pandemic, if any, and impact of the same on economic activity and mobility going forward.