India’s hospital sector is projected to grow by 18–20 per cent in FY2027, reflecting a positive business outlook supported by strong operating performance, according to a report by ICRA. The projection is based on a sample of 11 leading listed hospital companies and is underpinned by sustained high occupancy levels and healthy average revenue per occupied bed (ARPOB).
The sector is estimated to have grown by 16–18 per cent in FY2026, driven by favorable structural factors. Occupancy levels of the sample companies are expected to remain robust at 62–64 per cent in FY2026, slightly lower than 63.5 per cent in FY2025, while ARPOB is projected to expand by 6–8 per cent. In the first half of FY2026, the sample set reported 16 per cent year-on-year revenue growth, supported by an average occupancy of 63.3 per cent and a 7.8 per cent increase in ARPOB.
Operating profit margins remained healthy at 23.7 per cent in H1 FY2026, aided by an improved case mix and cost optimization. Cost initiatives, along with an improving case and payor mix, are expected to sustain operating margins of 22–24 per cent in FY2026, compared to 23.6 per cent in FY2025. Despite extensive greenfield and brownfield expansion plans across metro, tier-II, and tier-III cities, the credit profiles of the sample companies are expected to remain healthy, supported by strong accrual generation.
For the pharmaceutical sector, ICRA maintained a stable outlook for FY2026 and projected revenue growth of 9–11 per cent for its sample companies. Growth is expected to be driven by an 8–10 per cent expansion in the domestic market and 15–17 per cent in European markets, while pricing pressure on key drugs such as Lenalidomide is expected to limit US market growth to 4–6 per cent.
