India’s Private Hospitals to Add 4,000+ Beds with ₹11,500 Cr Investment in FY25: Crisil.

Private hospitals in India are set to expand capacity by over 4,000 beds in the next fiscal year with an investment of ₹11,500 crore, following an aggressive addition of 6,000 beds this fiscal, according to a Crisil Ratings report. The combined expansion in these two years will match the total bed additions between FY20 and FY24.

An analysis of 91 private hospitals, which generated around ₹64,000 crore in revenue last fiscal, highlights the sector's strong performance. Private hospitals currently account for 63% of India's healthcare sector revenue.

Between FY20 and FY24, private hospitals recorded an 18% compound annual growth rate (CAGR) in revenue and maintained a healthy operating profitability of 18%, ensuring strong cash flows. The growing demand for quality healthcare and India's relatively low bed capacity per person compared to other nations have driven significant private equity and IPO investments, strengthening hospitals’ balance sheets and enabling expansion without major credit profile risks.

“With occupancy levels nearing peak capacity at 65-70% and sustained demand, private hospitals are investing ₹25,000 crore over two years—nearly 80% higher than the average annual investment in the previous four fiscals,” said Anuj Sethi, Senior Director, Crisil Ratings. “Three-fourths of this capex will be funded through internal accruals, while equity markets and private equity have infused ₹55,000-60,000 crore since FY22.”

Half of the new beds will come from greenfield expansions, while 40% will be from brownfield developments aimed at modernizing existing facilities. The remaining 10% will be through acquisitions of under-construction or small and mid-sized hospitals.

"The large share of greenfield expansion brings execution risks, but since 70% of these projects are in metro and Tier-1 cities, hospitals are expected to reach optimal occupancy and breakeven within 12-15 months," said Naren Kartic K, Associate Director, Crisil Ratings. "Additionally, recent equity raises have strengthened balance sheets, mitigating capex-related debt concerns."

Key debt protection metrics, including interest coverage ratio and total debt-to-EBITDA, are expected to remain stable at 8.0 times and 1.2 times, respectively, mirroring last year’s performance.

While the rising demand for quality healthcare is expected to sustain occupancy levels, Crisil noted that hospitals' ability to maintain profitability amid regulatory changes will be crucial in the coming years.

HBL