Healthcare stocks in long runway for growth; HDFC Securities initiates with ‘Buy’ on Apollo Hospitals, Medplus Health

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₹16.5 - 17.5 lakh crore in FY28. The growth is likely to be driven by favourable macroeconomic factors such as healthcare infrastructure and a structural shift towards an organised market. The industry saw some growth impact during COVID in FY21 as it grew 10% YoY to ₹8 lakh crore and subsequently a bounce-back in FY22, growing 15% YoY to ₹9.2 lakh crore, and normalized growth in FY23 at 15% YoY to ₹10 lakh crore.

Going ahead, key structural drivers such as an ageing population, an increased incidence of lifestyle diseases, greater healthcare awareness, technology adoption, and a growing affluent middle-class serving the market are expected to aid the industry in clocking 11-12% CAGR over FY23-28E, HDFC Securities said in a report. Also Read: Auto ancillary vs OEMs: Which industry is better for investment? Here's what Motilal Oswal says Hospital Segment: Within this healthcare landscape, the hospital segment has already undergone the capex phase, as it added bed capacity over FY14-19. It is now in the execution phase, focusing on improving occupancy and average revenue per occupied bed (ARPOB), translating into a better margin.

Going ahead, the brokerage firm believes the bed expansion and improving operating metrics will support growth/margins. Diagnostics: The Indian diagnostics market is in the recovery phase post-COVID and it is expected to see an 8-9% CAGR over the next four years. This growth will be led by volumes, price hikes in select tests, expansion of wellness services, and geographical expansion, HDFC Securities said.