Apollo Hospitals, Max Healthcare and Fortis Health — here's why this analyst is positive on listed hospitals space

Improved occupancy level, increasing utilisation of infrastructure and thereby an expected growth in income generation are driving market optimism in the listed hospitals space. Param Desai, Research Analyst at Prabhudas Lilladhar, in a recent interview with CNBC-TV18, expressed a positive sentiments about the listed healthcare service providers.

“We are structurally positive on the space,” said Desai.

"Our preferred picks in the space are Apollo Hospitals, Max Healthcare and Fortis Health," he added.

According to Desai, one of the key factors driving optimism in the listed hospitals sector is the potential for improved occupancy levels. Many hospital companies have yet to reach the optimal utilization of their infrastructure and resources. This presents a significant opportunity for growth, as increasing occupancy rates would lead to enhanced revenue generation and overall operational efficiency.

The fiscal year 2024 is anticipated to be a turning point for hospital companies, with an expected improvement in occupancy rates.

“We believe that earnings momentum will sustain going forward,” he said.

Desai believes that despite most hospital companies not having reached the optimum occupancy levels, the upcoming fiscal year 2024 holds promise for improvements in occupancy rates. Additionally, Desai highlighted the growth potential for Fortis through its ongoing brownfield expansion initiatives, which could pave the way for margin expansion.

Desai also highlighted Fortis Healthcare's strategic approach to expansion, specifically through brownfield projects. Brownfield expansion involves expanding existing facilities to maximize their potential, rather than building entirely new hospitals. Desai believes that Fortis' ongoing brownfield expansion initiatives offer significant scope for margin expansion. By optimizing existing infrastructure and leveraging economies of scale, Fortis aims to enhance operational efficiency and drive profitability.

As healthcare needs rebound and hospital footfall increases, the listed hospitals sector stands to benefit from these favorable developments, paving the way for sustained growth and profitability.