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Quick Pointers

* Expect Q4FY26 to be a mixed bag

* Expect strong YoY growth for APHS, FORH & RAINBOW

Q4FY26 is expected to be a mixed bag for hospitals with elective procedures rebounding. However, some impact on occupancy is likely to be seen due to the Middle East conflict, new bed additions and festivals like Ramadan. We estimate the sector to deliver 18% YoY EBITDA growth (up 4% QoQ), supported by healthy ARPOB and new bed additions. Despite initial losses from new bed additions, strong ARPOB momentum, improving operating leverage, CGHS rate hikes and sustained bed additions position the sector for growth over the medium term. Our top picks are MAXHEALT, FORH, HCG and RAINBOW.

* NARH and APHS to deliver strong YoY EBITDA growth: NARH is likely to report strong EBITDA growth of 34% YoY supported by continued momentum in India and Cayman businesses, along with consolidation of the recently acquired UK asset. Adjusted for UK assets, we see EBITDA growing at ~16% YoY. In case of APHS, the core hospital segment is expected to deliver ~12% YoY EBITDA growth, led by ~7% YoY ARPOB. However, hospital EBITDA is likely to see a decline due to losses from the newly commissioned unit in Pune on QoQ basis. Additionally, HealthCo is likely to witness a sharp scale-up, with ~3x YoY EBITDA growth (~9% QoQ). Consequently, we estimate ~26% YoY growth in consolidated EBITDA for APHS.

* Single-specialty hospitals to see strong growth: RAINBOW is likely to report 24% YoY EBITDA growth, led by the strong ramp-up in new units and consolidation of Guwahati asset. During the quarter, 90 beds were added in Electronic City (Bengaluru). This may lead to marginal QoQ decline in occupancy. HCG is expected to post ~22% YoY EBITDA growth given the low base and continued ramp-up across newly commissioned centers, alongside gradual improvement in utilization and margins.

* One-offs to impact profitability for FORH and ASTERDM: FORH is likely to deliver 18% YoY EBITDA growth. Growth in the hospital segment will be moderate at 15% YoY due to lower international footfalls on account of the Middle East conflict. Further, doctor cost will be higher given the ongoing expansion and increasing competitive intensity. During Q4, FORH consolidated Yeshwanthpur (Bengaluru) acquisition with ~125 beds. On other hand, ASTERDM’s EBITDA growth will be at 13% YoY (down 2% QoQ), impacted by the nurses’ strike Kerala in Mar’26 and Ramadan festival.

* Muted quarter for MAXHEALT: The company is likely to see moderate EBITDA growth of ~9% YoY due to the CGHS drug-related impact on the oncology segment and flat ARPOB growth. During the quarter, 140 beds were planned to be added across Mohali and Nanavati.

* Losses from new units expect to drag profitability for KIMS, MEDANTA and JLHL: MEDANTA is likely to see moderate Q4 with YoY EBITDA growth in lower single digits, due to start-up losses from the Noida unit. We expect KIMS to report moderate EBITDA growth of 8% YoY, given losses from new units. However, Thane and Nashik units achieved breakeven in Mar’26, indicating better growth in the coming quarters. We expect JLHL to deliver 11% YoY EBITDA growth. We have assumed Rs40mn losses in Q4 taking into consideration commercialization of the new greenfield unit in Dombivli.

* Margins a mixed bag: YoY margins are expected to remain a mixed bag due to new hospitals’ drag. APHS, HCG, FORH and RAINBOW are expected to benefit from operating leverage, while margins of MEDANTA, KIMS and JLHL continue to be under pressure due to start-up losses from new units.

* Occupancies to recover sequentially: Occupancies are expected to recover by 100–200bps QoQ in Q4FY26E on seasonal normalization, albeit impacted by lower international footfalls and new bed additions.

* Strong ARPOB growth to sustain: ARPOB growth remains a key positive and is expected to range from 1% to ~12% YoY across companies. Higher case complexity, better payor mix, and periodic price revisions continue to support realizations, helping offset lower occupancies in Q4.

* Sector outlook remains positive: With the hospital sector witnessing continued demand, corporatization, higher elective and complex surgeries, and increasing insurance penetration, preference for large hospital chains is increasing. To meet the rising demand, hospitals companies under our coverage have earmarked large bed additions over the next 4-5 years. Overall, we see 15-32% EBITDA CAGR over FY26-28E for our coverage universe.

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