The healthcare sector in India is anticipated to experience a robust growth of 12.6% in
revenue during Q1FY25, according to analysis from BNP Paribas Securities India Private
Limited. This growth is driven by a 15% increase in hospital revenues and a 12% rise in
diagnostics. Key players like Apollo Hospitals Enterprise (APHS) and Fortis Healthcare
(FORH) are expected to achieve a 6% year-on-year growth in average revenue per operating
bed (ARPOB). Apollo Hospitals is maintaining a stable 62% occupancy rate, while Fortis
Healthcare aims to increase its occupancy to 65%, up from the current 64%.
Analyst Tausif Shaikh highlighted, “We anticipate stable performance across Indian
healthcare services in the upcoming quarter, with a combined revenue growth of 12.6%
year-on-year. Hospitals are leading with a 15% increase, complemented by a projected 12%
growth in diagnostics.” The report also forecasts a 150 basis point improvement in earnings
before interest, taxes, depreciation, and amortisation (EBITDA) margins, primarily supported
by the hospital segment.
APHS’s offline pharmacy business is expected to grow by 10% year-on-year, although its
online ventures are predicted to remain stable quarter-on-quarter. Conversely, FORH is set to
enhance its EBITDA margin by 280 basis points year-on-year to reach 19.2%. In the
diagnostics sector, companies such as Dr Lal PathLabs (DLPL) and Metropolis Healthcare
(METROHL) are expected to benefit from increased patient volumes and improved
realisations. However, challenges are anticipated for FORH’s diagnostic arm, Agilus, due to
weaker brand recognition following a recent rebranding.
The report maintains a positive outlook for the sector, with unchanged earnings estimates,
target prices, and ratings. APHS and METROHL are identified as top picks, given their
strategic expansions and potential growth opportunities. While potential risks such as delays
in occupancy improvements and heightened competition were acknowledged, overall
sentiment remains optimistic.
Menu
