New Delhi: Following a strong push for bed capacity expansion in FY 2024-25, breaking pandemic-period trends, Indian private hospitals are expected to continue this focus in the next fiscal year. An analysis by Crisil Ratings projects that private hospitals in India will add over 4,000 beds in FY 2025-26, backed by an investment of ₹11,500 crore.
This expansion builds on a fiscal year in which hospitals added approximately 6,000 beds nationwide. If these trends materialize, the total bed additions in FY 2024-25 and FY 2025-26 will match those added during the four-year period from FY 2020 to 2024.
Explaining the factors behind this expansion, Crisil notes that hospitals’ strong financial performance and India’s relatively low bed capacity per capita—compared to both developed and developing nations—have driven substantial investments through private equity and initial public offerings (IPOs). These investments have strengthened balance sheets and enabled hospitals to pursue ambitious capacity expansion plans.
Sharing additional insights, Anuj Sethi, Senior Director, Crisil Ratings, stated, “With occupancy rates nearing the peak of 65-70 per cent and sustained demand for quality healthcare, private hospitals will cumulatively invest ₹25,000 crore over this and the next fiscal. This is nearly 80 per cent higher than the average annual investment in the previous four fiscals.”
The substantial capital expenditure (capex) will be funded through internal accruals, supported by strong return metrics. Since FY 2022, private equity and equity markets have invested approximately ₹55,000-60,000 crore in the hospital sector.
During FY 2025-26, the interest coverage ratio and total debt-to-EBITDA are expected to remain around 8x and 1.2x, respectively. Continued demand for quality healthcare is also projected to keep hospital occupancy levels high.
According to Crisil, half of the new beds will come from greenfield expansions, 40 per cent from brownfield development, and the remaining 10 per cent from acquisitions of under-construction hospitals and small-to-mid-sized hospitals.
Naren Kartic K, Associate Director, Crisil Ratings, highlighted potential risks, stating, “The large proportion of greenfield expansion poses challenges related to timely completion and occupancy ramp-up. However, since 70 per cent of these projects are in metropolitan and Tier 1 cities—where hospitals typically reach optimal occupancy and break even within 12-15 months—the impact on profitability and return metrics is expected to be limited.”
Over the past four fiscal years (FY 2020-24), private hospitals have reported a compound annual growth rate (CAGR) of 18 per cent in revenue and an operating margin of 18 per cent.
Crisil Ratings tracks and analyzes 91 private hospitals, which collectively generated approximately ₹64,000 crore in revenue in FY 2024.>
