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Healthcare sector revenues likely to grow by 20% in FY22: ICRA
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SME Times News Bureau | 19 Jan, 2020
Even as the healthcare sector witnessed squeezing of revenues due to the
Covid-19 pandemic, its long-term outlook remains stable on the back of
swift rebound in occupancy as well as structural factors, ICRA said on
Monday.
The rating agency expects the occupancy of companies in
the sector to bounce back substantially to 60 per cent in FY22, from the
estimated occupancy of 52 per cent in FY21, and the revenue growth to
be at 20 per cent in FY22, against an estimated contraction of 19 per
cent in FY21, aided by a lower base as well.
There has been
significant sequential improvement in occupancy every month after the
sharp fall in April and the pent-up demand is also likely to support the
performance, as elective procedures cannot be delayed indefinitely by
domestic as well as international patients, the report noted.
Due
to the high operating leverage, the EBITDA margin is likely to rise to
13 per cent in FY22, against an estimated EBITDA margin of 9 per cent in
FY21. The capital expansion was already slowing down, even pre-Covid,
and is likely to remain modest in FY22 as the players have adequate
capacity to grow over the medium term and the near-term focus is on
better utilisation of the existing facilities rather than expansion of
the network.
Consequently, the capex as well as startup costs of
new hospitals are likely to be much lower going forward, which will also
aid profitability. The net debt is expected to stay largely
range-bound, but the debt protection metrics is likely to improve
significantly due to a sharp rise in accruals, ICRA said.
According
to Kapil Banga, Assistant Vice President, ICRA: "The credit risk
profile of entities in the sector had been on improving the trajectory
over the last two years and notwithstanding the near-term disruption due
to the pandemic, as well as given the essential nature of the
services, ICRA believes the sector will resume on its growth trajectory
in FY22. The risks to the recovery could be in the form of additional
regulatory measures, protracted restrictions on international travel and
jump in Covid-19 cases".
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