Experts see promise in hospitals' growth plans

Strong cash flows, comfortable debt position augur well for health care stocks

- HARSHITA SINGH

The Street's response to hospital stocks has largely been positive since April this year. Barring a few big names such as Apollo Hospitals, and Fortis Healthcare, most stocks have outperformed the markets.

Aster DM Healthcare, Shalby, and Max Healthcare have been the top performers during this period, having gained up to 26 per cent as compared to a 0.9 and 2 per cent slide in the BSE Sensex, and BSE Healthcare indices, respectively.

Going ahead, analysts expect the momentum to continue as the prospects remain fairly upbeat. The sector, they say, is a favourable bet over the medium to long term as most players are yet to hit their peak utilisation levels.

"Hospital players have been in a consolidation phase for the past few years, and the benefit started reflecting only in the last two years. However, most companies have still not reached their optimum utilisation levels, with some still operating below pre-Covid-19 levels. International patient inflow has also not fully recovered. These factors will drive growth in the medium term," says Param Desai, Research Analyst at Prabhudas Lilladher.