Private Hospital Chains to Invest INR 30,000 Cr in Bed Expansion by FY27: ICRA

The expansion will be driven by 11 listed and two large unlisted hospital chains across metros and Tier-II and Tier-III cities.

Private hospital networks in India are expected to invest between INR 30,000 and INR 32,000 crore to expand bed capacity by over 14,500 beds by FY27, according to a recent outlook released by credit rating agency ICRA.

The expansion will be driven by 11 listed and two large unlisted hospital chains across metros and Tier-II and Tier-III cities.

The report marks a significant push in healthcare infrastructure, translating to around a 26% increase in the total bed capacity of these networks compared to the end of FY25.

ICRA highlighted a continued trend of inorganic growth and consolidation, backed by strong financials and investor interest.

The report further stated, “Many hospital chains are looking at inorganic opportunities, which led to increasing consolidation in the past few years and given the strong financial performance outlook, the sector has witnessed heightened interest over the past few years from institutional investors.”

For FY26, the bed occupancy rate is projected to remain between 62–64%, while average revenue per occupied bed (ARPOB) is expected to grow at 6–8%, continuing the 7% year-on-year growth recorded in FY25.

Speaking on sector trends, Mythri Macherla, Vice President & Sector Head, ICRA, said, “In FY26, the industry's ARPOB growth is expected to remain between 6–8 percent, in line with the 7 percent YoY expansion seen in FY25 and annual price revisions by companies to offset cost inflation, in addition to technological advancements (such as robotic surgeries) augmenting high realisations for the hospitals."

Operating profit margins for hospitals are estimated between 22% and 24%, supported by ongoing cost optimization and digitization measures.

The return on capital employed (RoCE) for FY26 is projected at 13–15%. Meanwhile, the Debt/OPBDITA ratio is expected to increase slightly to 2.4–2.6x due to capex-led borrowing, compared to 2.1x as of March 2025. However, the report classifies the debt metrics as stable given rising OPBDITA levels.

Stay tuned for more such updates on Digital Health News