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Eleven listed hospital chains and two big unlisted players are set to boost their bed capacity by a whopping 26% from FY2025 levels. New beds will pop up in buzzing metros, tier-II hotspots like Nagpur, Lucknow, Ongole, and Coimbatore, and even tier-III towns, bringing quality care to places that desperately need it.
ICRA (Investment Information and Credit Rating Agency of India Limited.) noted that the expansion will raise the total bed count across these private hospitals to nearly 70,000 by FY2027, up from about 55,500 at the end of FY2025. The projects will be executed through both greenfield developments and brownfield expansions.
The hospital sector’s future looks bright, with ICRA slapping a Positive outlook for FY2026. Expect beds to stay packed at 62-64% occupancy, building on last year’s solid 63.5%. Revenue per occupied bed is set to jump 6-8%, just like FY2025’s 7% rise, while profit margins hold steady at a healthy 22-24%. Even with fewer international patients due to tensions in Bangladesh, hospitals are thriving thanks to better specialties, more insurance and cash payments, price tweaks to match inflation, and high-tech procedures like robotic surgeries.
As per ICRA estimates, the ARPOB growth for the industry is expected to remain between 6-8% in FY2026, in line with the 7% YoY expansion seen in FY2025. The consequent operating leverage and ongoing cost optimisation measures and digitisation initiatives will result in stable OPM of 22-24% for the industry in FY2026.
Mythri Macherla, ICRA’s Vice President and Sector Head
Hospitals aren’t just building new wings, they’re snapping up competitors to spread their reach and specialties, sparking a wave of consolidation. Investors are taking notice, drawn by the sector’s strong financials. Even with debt funding these big projects, the numbers stay solid: debt metrics will tick up slightly to 2.4-2.6x by March 2026 from 2.1x in FY2025. Returns on investment are looking up too, expected to hit 13-15% in FY2026, thanks to stronger profits from established hospitals and quicker wins from new ones.
According to ICRA, the capital expenditure of ₹30,000–₹32,000 crore planned till FY2027 is nearly double the ₹16,000 crore spent by hospital chains in the preceding three years, underscoring the sharp rise in sectoral investment momentum.
ICRA has cautioned that the sharp rise in bed capacity will require a parallel increase in trained medical professionals and support staff to ensure service quality. Hospitals are expected to intensify hiring of doctors, nurses, and paramedics in the coming years, while also investing in training and digital systems to optimise manpower. The expansion is likely to improve healthcare access in underserved regions, but workforce shortages may remain a challenge unless addressed proactively.
Reference:
1. ICRA Limited. Press Release: FY2026 to Be Another Robust Year for the Indian Hospital Industry; Sector Outlook Revised to Positive. Office of Public Health, July 31, 2025. Accessed August 28, 2025.
https://www.icra.in/CommonService/OpenMediaS3?Key=4fce5207-55d9-4778-9a0d-ecea5f3cefb5
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