The Indian hospital industry’s business outlook appears positive, with an anticipated revenue growth of 18-20% in FY2027, as per a report by credit rating agency ICRA. This growth projection is based on the performance of 11 leading listed hospital companies, showcasing sustained high occupancy rates and healthy average revenue per occupied bed (ARPOB). In the previous fiscal year, FY2026, the sector witnessed a growth of 16-18%, reflecting expectations of continued strong operational metrics supported by favorable structural factors.
“The Indian hospital industry’s performance is expected to remain robust in FY2026, driven by healthy occupancy rates and ARPOB,” stated Mythri Macherla, Vice President and Sector Head, Corporate Ratings, ICRA. ICRA forecasts that the occupancy rates for the sample set companies will remain strong at 62-64% in FY2026, with an expected 6-8% expansion in ARPOB. The first half of FY2026 saw a 16% year-on-year revenue growth for the sample set, supported by an occupancy rate of 63.3% and a 7.8% increase in ARPOB.
In H1 FY2026, the operating profit margin (OPM) stood at a healthy 23.7%, benefiting from improved case mix and cost optimization efforts. Macherla highlighted that cost optimization initiatives, coupled with enhancements in case and payor mix, are anticipated to maintain the OPM within the range of 22-24% for the sample set companies in FY2026. Despite significant expansion plans in various cities, the credit profile of the sample set is expected to remain robust due to strong accrual expectations.
ICRA also affirmed a ‘stable’ outlook for FY2026 for the pharmaceutical sector, with a projected revenue expansion of 9-11% for its sample set of companies. The growth is expected to be driven by a healthy 8-10% growth in the domestic market and 15-17% in European markets, while pricing pressures on specific drugs may lead to a moderated growth of 4-6% in the US market. The operating profit margin (OPM) for the pharmaceutical sample set is forecasted to remain stable at 24-25% in FY2026, supported by solid performance in key markets and stable raw material costs.
