Stories
Hospital Stocks Offer Buying Opportunity After Recent Sell-Off Says InCreds Aditya Khemka
- •Aditya Khemka from InCred views the recent sell-off in hospital stocks as an attractive entry point for investors, comparing it to past regulatory corrections in 2017 and 2019.
- •Khemka remains extremely bullish on the sector due to India's severe shortage of hospital beds, with only 15 beds per 10,000 people against a global average of 35.
- •Private hospitals are expected to adjust pricing across service bundles to protect profitability if regulators impose margin caps on specific offerings.
- •Listed hospital chains typically generate a return on equity of 15 to 20 percent, supported by strong ongoing demand.
- •Medical tourism presents an additional growth catalyst as India offers above-average healthcare quality at below-average costs.
Key Questions Answered
Aditya Khemka notes that past regulatory price interventions in 2017 and 2019 also presented strong buying opportunities. He remains extremely bullish due to India's severe hospital bed shortage, strong structural demand, and the ability of hospitals to adjust pricing across service bundles to protect profitability.
Khemka explains that hospitals operate as platform businesses combining patients, doctors, and infrastructure. If regulators place margin caps on certain portions of a service bundle, hospitals can adjust prices on other parts of the offering to maintain overall profitability.
India has only about 15 hospital beds per 10,000 people, including government beds, which is significantly lower than the global average of 35. Developed markets like Japan and South Korea feature approximately 120 beds per 10,000 people.
