Healthcare sector's revenue expected to grow 20% in 2021-22: Report

Revenue growth of the healthcare sector, which was one of the worst impacted due to the pandemic as people delayed costly elective medical interventions, is expected to recover next fiscal and may touch 20% as the occupancy is on the mend, according to a report.

Domestic rating agency Icra has a stable outlook for the sector in the long-term outlook, given the swift rebound in occupancy as well as structural factors.

It expects occupancy to bounce back to 60% in 2021-22 from around 50% in 2020-21, helping push revenue growth to around 20% in 2021-22 as against an estimated 19% contraction in 2020-21.

Operating margin may touch 13% in 2021-22 from a (-)9% in 2020-21, it said in the report.

However, it said hospital operators may go slow on capital expenditure (capex), which anyway was slowing even before the pandemic given the existing capacity that is adequate for growth in the medium term.

Their near-term focus seems to be on better utilisation of existing facilities rather than expansion, said the report. Consequently, this will aid profitability, it added.

Net debt is expected to stay largely range-bound but debt protection metrics is likely to improve significantly due to a sharp rise in accruals, the report said.

Risks to the recovery could be in the form of additional regulatory measures, protracted restrictions on international travel and jump in the pandemic in new cases, said the report.