“We retain our positive view on the growth outlook for the hospital sector on intact structural drivers: An ageing population, more lifestyle related disorders, increasing healthcare insurance coverage, rising income levels, and better paying ability,” said the analysts at the brokerage.
HSBC said that the growth outlook for the hospital sector is positive due to a rise in demand for quality healthcare and added that most of the listed players have embarked on a capex cycle post consolidation.
ETMarkets.comAmid demand for quality healthcare, seven hospitals, in their coverage, plan to more than triple the number of beds added in the period between FY 19 and FY 24, in the next 3 to 5 years.
The brokerage said the impact of capacity expansion cost on EBITDA margins would depend on the number of bed additions relative to the current capacity, the location of new units, and execution (timely launches, quick ramp-ups).”In view of favourable demand dynamics, we expect new beds to be easily absorbed without excess supply issues,” said HSBC in a report. “Our scenario analysis indicates that ongoing expansion will lead to an EBITDA margin drag of 0.2-4% over FY24-27e, considering the above factors.”
