Hospitals, diagnostic chains set for robust Q1FY27; patient footfalls, test volumes drive growth

Healthcare services companies are headed for another healthy quarter, with hospital chains expected to benefit from strong patient footfalls, improving case mix and fresh capacity additions in the April-June period. Rising test volumes and network expansion will give a boost to diagnostic players, analysts have said.

“Better patient inflows, case and payor mix improvement and new beds or hospital additions” are expected to drive growth across operators in Q1FY27, ICICI Securities latest report said.

The brokerage estimates its hospital coverage universe will report 22.1 percent year-on-year revenue growth and 23.4 percent EBITDA growth in the June quarter.

The underlying demand environment remains robust. After visits to hospitals operated by Max Healthcare, Medanta and Fortis in Lucknow and Noida, Elara Securities said it remains confident that “sustained demand growth for organised tertiary and quaternary care can absorb the recent and upcoming capacity additions over time”.

Low organised-bed penetration, rising insurance coverage and growing patient preference for corporate hospitals will drive growth in the segment.

Elara added that facilities across its hospital visits reported “healthy occupancy, robust patient inflows, and stronger demand for complex specialties such as oncology, cardiac sciences, neurosciences and transplants”, indicating that demand continues to keep pace with rapid capacity expansion.

Apollo, Fortis seen leading hospital pack
Apollo Hospitals is likely to be among the strongest performers. ICICI Securities expects revenue growth of about 18 percent, aided by healthy hospital occupancy, new bed additions and continued momentum in pharmacy and digital healthcare subsidiary HealthCo.

The brokerage said margin expansion would be driven by “improved profitability in HealthCo”, though operating costs related to new hospitals may partly offset gains.

HDFC Securities echoed the optimism, projecting 19 percent revenue growth. “Steady occupancy and ARPP growth and new bed addition” should power the hospital business. It also expects lower losses from Apollo 24/7 to support profitability.

According to analysts, Fortis Healthcare hospital business is expected to post nearly 19 percent revenue growth, supported by bed capacity expansion and occupancy ramp-up.

Max, Medanta face expansion drag
For Max Healthcare, growth may be muted versus peers. ICICI Securities said a “slowdown in Delhi could continue and may taper revenue growth of Max at 10 percent”, although EBITDA is expected to rise about 18 percent because of a favourable base.

HDFC Securities also said “margin is under pressure due to moderate sales growth and new hospital led drag”.

Global Health, which operates the Medanta chain, is expected to report nearly 13 percent revenue growth. However, losses from the newly launched Noida facility will weigh on profitability, analysts said.

Aster’s merger adds focus
Aster DM Quality Care, which completed its merger with Quality Care India, will be closely watched. The merged entity is expected to deliver 16-17 percent revenue growth, supported by occupancy gains and strong traction across clusters, brokerage houses estimate.

Diagnostics maintain steady momentum
Diagnostic chains are expected to deliver another quarter of double-digit growth.

ICICI Securities forecasts 14.3 percent revenue growth and 18.7 percent EBITDA growth for its diagnostic coverage universe, driven by “healthy test and patient volume growth, supported by test mix improvement and network expansion”. The brokerage expects aggregate EBITDA margins to expand by around 110 basis points.

Dr Lal PathLabs is likely to report revenue growth of 11-14 percent. ICICI Securities cited “recent lab additions, improving traction at Suburban Diagnostics and the scale-up of newly added centres” as key growth drivers.

Metropolis Healthcare is expected to be a standout performer. It has already indicated around 16 percent revenue growth, driven by “higher patient volumes and better realisation aided by a change in product mix”, with specialty testing and TruHealth wellness segments leading growth.

Thyrocare and Vijaya Diagnostics are also expected to clock high-teen growth. Moneycontrol