Private hospitals to inject Rs 40,000 cr into India's healthcare expansion, but profit pressures rise

India's leading private hospital chains are expected to invest around Rs 40,000 crore to add more than 38,000 beds by 2030, driven by rising healthcare demand from an ageing population, the growing prevalence of chronic diseases and expanding health insurance coverage, according to a report by Bajaj Broking Prive.

"The capital expenditure (capex) boom estimates a corporate outlay of ~Rs40 billion, with major private networks aimed at expanding capacity by ~54% to add over 38,000 beds by 2030," the report said, adding that India's healthcare market is poised to surpass $372 billion by 2027.

The growth, it said, will be driven by rising insurance penetration, medical tourism, digital health adoption and expansion into tier-II and tier-III cities.

The report noted that India continues to face a significant shortage of healthcare infrastructure, with only 1.3 hospital beds per 1,000 population, well below the global median, underscoring the need for sustained capacity expansion.

"There is higher focus on brownfield expansions with about 63% of upcoming incremental bed capacity in the industry coming from upgrading existing hospitals, thus encouraging faster execution, lower capex and quicker breakeven," the report said.

It added that average revenue per occupied bed (ARPOB) is expected to increase by nearly 45% as hospitals expand their focus on speciality care.

Demand is expected to be strongest outside the metros. "Healthcare demand in Tier II-III cities/towns is estimated at a 16-18% CAGR, a faster pace than 12-14% CAGR estimated in metro cities," the report said.

It added that more than 70% of hospitals empanelled under the Ayushman Bharat scheme are located in tier-II and tier-III cities, providing corporate hospital chains with a steady patient base.

Among listed players, the brokerage retained a positive outlook on Apollo Hospitals Enterprise, Narayana Health and Rainbow Children's Medicare, citing their expansion pipelines and long-term earnings visibility.

According to the report, Apollo Hospitals plans to invest around Rs 8,000 crore to add nearly 4,400 beds, while Narayana Health has outlined a Rs 3,000-crore domestic capital expenditure programme to build six new projects that will add around 2,000 beds over the next three years. Rainbow Children's Medicare, meanwhile, has more than 900 beds under development as it expands into northern and central India.

On Apollo Hospitals, the brokerage said, "AHEL is set to benefit from the rising demand in healthcare tourism and domestic patients. With a robust capex plan to add ~4,400 beds by FY30 and the completion of business restructuring to concentrate on core healthcare operations, AHEL is poised for a healthy growth trajectory."

For Narayana Health, the report said the company "presents a compelling growth opportunity driven by aggressive global expansion, robust domestic operational metrics, and structural changes in high-margin clinical segments." 

Rainbow Children's Medicare, meanwhile, is "transitioning from a capital-heavy build-out phase into an earnings-harvesting phase, which is expected to unlock significant operating leverage," it added.

The brokerage expects the expansion cycle to support strong financial performance over the medium term. It has projected FY27 revenue growth of 18.5% for Apollo Hospitals, 33.1% for Narayana Health and 17.7% for Rainbow Children's Medicare, while indicating that margins could improve as newer hospitals mature and occupancy levels increase.

The report, however, flagged several risks to the sector. "Public healthcare expenditure (hovering around 2% of GDP) remains historically low among G20 peers, leaving the burden heavily reliant on out-of-pocket costs and private complements," it said.

It also warned that cost pressures, regulatory tightening, pricing controls and slower ramp-up of new facilities could weigh on profitability despite the sector's favourable long-term outlook.