Q1FY27-Hospital companies projected to be standout performers, MOFS

India’s healthcare sector is headed for a healthy first quarter of FY27, with hospital operators once again leading the pack even as profitability across the broader industry stays under pressure, according to a report by Motilal Oswal Financial Services (MOFS).

The brokerage expects its healthcare coverage universe, including hospitals, to post aggregate revenue growth of 13.2% year-on-year in Q1FY27 — a marked improvement from the “subdued” 10.8% growth (excluding hospitals) recorded through FY26. “After a subdued show in FY26 (revenue growth of 10.8% YoY excl. hospitals), we expect our Healthcare coverage universe, including Hospitals, to deliver better growth in 1QFY27,” MOFS said. Hospital companies are projected to be the standout performers, with revenue rising around 16.1% year-on-year to Rs 133.4 billion, driven by capacity additions, improved average revenue per occupied bed (ARPOB), strong operational execution and the commissioning of new facilities.

On the pharmaceuticals side, MOFS pointed to a steady recovery in the domestic formulations market. Chronic therapies maintained strong momentum in April-May 2026, growing around 15.5% year-on-year, while acute therapies accelerated to 10% growth, up from 7.5% in FY26 and 7% in FY25. Cardiac, anti-diabetic, and vitamins, minerals and nutrients (VMN) categories outperformed the broader Indian Pharmaceutical Market (IPM).

Despite the topline strength, profitability is set to lag. MOFS estimates EBITDA growth of a modest 5% year-on-year for the sector, while profit after tax (PAT) is projected to decline 3% — a divergence largely attributed to pricing pressure on select high-margin niche products in the US and a challenging geopolitical backdrop. The brokerage flagged that US revenue for its coverage universe is expected to fall 5.4% year-on-year to $2.3 billion, weighed down by a steep 28-30% decline in US sales of certain products. Favourable currency movements and robust growth in the domestic formulations business are expected to partly cushion the blow.

The findings echo a broader bullish stance MOFS has taken on hospitals in recent weeks. The brokerage has named Max Healthcare and Global Health (Medanta) as its top picks in the space, citing strong patient volumes, hospital ramp-ups and an aggressive capacity expansion pipeline. It expects Medanta to deliver a 28% earnings CAGR over FY26-28, aided by the scale-up of its Noida facility and improving utilisation across existing hospitals, while Max Healthcare continues to expand its footprint beyond its Delhi-NCR stronghold.

Even so, MOFS has maintained a neutral overall stance on the healthcare sector, weighing the strong revenue momentum in hospitals and select pharma categories against the margin pressures facing export-oriented drugmakers. For investors, the report points to a bifurcated quarter ahead: hospitals riding robust domestic demand and capacity build-out, while pharmaceutical companies navigate a tougher US pricing environment even as their home market strengthens.
MB Bureau