New Delhi [India], April 7 : The healthcare sector in the country is expected to post a 17.2 per cent year-on-year (YoY) growth in EBITDA for the fourth quarter of FY25, says a report by Nuvama.
The report stated that this growth will largely be driven by an 18.1 per cent rise in hospitals and a 9.4 per cent increase in the diagnostics segment. However, the report highlighted that the overall performance of healthcare companies in Q4FY25 has been underwhelming due to a softer-than-usual season.
It said "We estimate the healthcare sector's Q4FY25 EBITDA shall grow 17.2 per cent YoY driven by growth of 18.1 per cent in hospitals and 9.4 per cent in diagnostics".
Traditionally, the fourth quarter tends to outperform the third quarter for the healthcare sector, but this time, various challenges have weighed on earnings.
The report pointed out that the quarter saw low patient footfall, which can be attributed to a weak acute season and disruptions caused by festivals like Mahakumbh travel, and people postponing diagnostic tests. These factors have dampened demand for both hospital and diagnostic services.
In diagnostics, revenue growth is expected to remain slow at 12.6 per cent YoY. The segment has been significantly impacted by a reduction in footfall, as people prioritized travel and festive celebrations over healthcare needs.
The report noted that such seasonal disruptions have reduced the urgency for medical testing, leading to subdued performance.
The hospital segment, which generally performs better in the fourth quarter, is also expected to witness softer growth.
Hospitals under Nuvama's coverage are likely to report revenue growth of around 12 per cent YoY and EBITDA growth of 14 per cent YoY. This too is largely volume-driven and reflects the overall sluggish demand environment.
Given the weaker-than-expected Q4 performance, the report warned that there could be some potential earnings cut for FY25 across healthcare players.
The report suggested that the sector's usual momentum was disrupted this time around, and companies may find it difficult to match earlier earnings estimates.
In conclusion, while there is still growth in the sector, the overall tone remains cautious. Analysts suggest keeping an eye on how the upcoming quarters unfold, especially as seasonal trends normalize and footfalls potentially improve.
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