Why This Policy Could Double Margins for Indian Hospitals!

India's hospital sector which is a very, very important sector to watch out. Are there any structural changes that are happening and is there any growth catalyst which is coming out is what we are going to discuss today. The recent rate revision of CGHS central government health scheme where the government has implemented, can it act as a growth catalyst where the entire hospital sector related companies, will there be a re rating in the stocks? And apart from the CGHS rate revision, is there any structural reforms, is there any medical tourism boom which is picking up, which is bringing in this sector in limelight is what we are going to discuss in today's session, right? So hi, this is Ganesh Komma and I'm India's leading finance and stock market coach. We take sessions, we conduct educational sessions combining fundamentals and technicals. So how you can achieve your financial freedom by investing into stocks, how you can spot stronger companies, how you can spot stronger sectors, how you can do your asset allocation is what we focus in this channel. So first of all coming into the discussion, right? So today's topic we will be deep diving into the entire hospital sector, right? The impact of CGHS and the structural sectoral tailwinds. So tailwinds means any positive changes, positive implications that are helping the entire sector to grow is what we will be addressing today. First of all, a standard disclaimer. We are a SEBI registered entity. So the stocks or the sectors which we discussed today, please consider them as educational purpose and not as a recommendation for a buy ad or a sell recommendation, right? Some of the stocks I would be having in my own portfolio or we would have discussed with our community members. So don't consider them as any tips or recommendation and just consider them for illustration or educational purposes, right? And investment in securities market are subject to market risk. Read all the documents and understand about the sector and the stock before investing. So now going to the discussion, first of all looking at the entire fundamentals about hospital sector, yes, it is in a very good growth trajectory. The market which is at around 10.7 trillion rupees is expected to grow at around 16 trillion rupees by 2028. And private sector share is also rapidly increasing. And if you look at our per capita income, right? Health care is very, very important, right? Healthcare is very very important. And India's healthcare specifically if you look at is experiencing a wonderful growth because people wanted a better standard of life, right? The income raising urbanization trends, right? And increased the health awareness post pandemic. Right? The COVID post Covid scenario. And this is Resulting into superior service quality. And there are many constraints also in the hospital sector, be it in workforce and in infrastructure also there are a lot of constraints which we'll be discussing going forward. Now you see the supply demand gap, right? So this one figure will tell you a lot about what are the growth prospectives, right? So the bed density per 10,000 population is only 16 in India. Whereas globally if you see the, the average is around 33. So that itself highlights in the infrastructure there is a lot of deficit, right? And the capacity should be increased by many number of times. Right? Out of 10,000 the density is just. The bed density is just 16. And if you look at health professionals per 10,000, there are only 20 healthcare professionals for a 10,000 population. So this also signifies there is a workforce shortage. And healthcare spending as a percentage of GDP internationally or even in developed markets it is above 10 percentage. But in India the healthcare spending as a percentage of GDP is just a 3.3 percentage. There is a lot of room there. So this, these structural gaps represent multi decade investment opportunity in India, right? So you, you would be thinking healthcare or even hospitals, they are charging to higher amount. Government will come very strong on them, government will regulate them, government will keep all the things at a thing. And government is going to majority of the hospitals? I don't think so. It's not a very, very easy thing for government to do because when you look at the entire population and the number of beds available for 10,000 which is very low, the healthcare professionals, right? With this kind of a number, government should do all those things which can support hospitals, which can support health care to further increase the capacity, right? So now hospitals should increase their capacity. Expansion in the number of beds, increase in the number of professionals, increase in the number of hospitals. They should be expanding, government will be supporting them. So government going against them. The probability is less considering just the supply demand gap. Okay, next. Recently there has been a big game changing catalyst which happened on October 13, 2025. CGHS Central Government Health scheme where the rates have been pending for almost 15 years over decade now for around 2000 medical procedures, CGHS rates have been revised and this rate increase is to the tune of around 10 to 30 percentage across procedures. Right? And the highest rates were also done in tier one cities. Right. So if you look at the revenue impact when the CJHS rates all the central government employees who avail this healthcare system, when these rates have been revised for 2000 medical procedures directly for the companies, they get a uplift of around 4 to 12 percentage uplift in their revenue and any companies or any hospitals which are having a higher exposure to government scheme are getting more benefited. We'll discuss which company which stock has a higher exposure to government schemes. Also we'll discuss and on the margins, if you look at the EBITDA margins, there is almost like a 400bps increase in the margin also we can expect and competitive edge, right? Because of this higher increase in the CGHS rates it will enhance more competition and it's good for the hospitals also. And apart from the CGHS rate revision as we discuss with majority of the promoters CEO of the hospitals like be it like Apollo hospitals or even Narayana when they came out on October 13th 14th regarding the CGHS, majority of the CEOs or hospitals are happy because this has been a pending for almost 15 years and apart from this one more, another important catalyst could be majority of the hospitals which are tied up with government schemes. One major problem is receiving of funds, right? They do all these procedures but there is a lot of delay from the government in settling those funds. If that also can be fastened up, it will be great for the hospitals to even become much bigger, right? Much bigger. And if you look at a small math in terms of margins for hospitals which is having like 10% exposure into CGHS, they see a 20% EBITDA margins with a 25% rate hike, right? And on the operating leverages also a higher utilization will lead to a better margins, right? With improved rates and cashless claims and even government settling the funds for hospitals much faster it will help them to increase on the beds and whatever are the beds which are there, filling up of the beds also will be much faster, right? And this data if we move into specific stocks into hospital sector we have like Yadaarth Hospitals, Max Healthcare Narayana Hodeyalaya Kim's Fortis Apollo Aster dm. Right? All these are there and I've given you a small comparison between government scheme exposure which is the black field and the expected EBITDA margins impact which is the brown, right? So don't consider them as any tips or a recommendation of stock buy or sell or add. This is just to give you a pictorial identification that yes, Yadar Hospital has a higher exposure to CGHS scheme Government scheme exposure. Next we have Max Healthcare Narayana Hodeya Kim's Fortis Apollo Aster dm. Depending upon their exposure into the government scheme, their margins also we can expect increase. And if you look at it is only the CGHS a catalyst for the hospital stocks to move or the hospital stocks to be in limelight. No, the most important thing here is also medical tourism, right? So if you look at the data which is this year's data, 1.3 lakh foreign patients which is around 4.1 percentage of the tourist arrivals, right? So there is a very good increase in the medical tourism. There is a foreign patients also entering into India because of better affordability, cost and the price when compared to US and other developed economies. And even on this topic of foreign tourism or tourism boom in the Indian hospital stocks, we have done a detailed video. You can go to this below link and you can also deep dive into how tourism is. Medical tourism is having a boom in India and how it will benefit all the hospital related stocks, right? And also if you see the other tailwinds or the other segments which are benefiting the hospital stocks beyond CGHS scheme are like capacity addition all the hospitals I'll give you hospital by hospital the number also the next five years they have a target to hit 32,000 new bits. And Apollo hospitals alone is trying to have a 45 percentage capacity jump in their beds which is almost to the tune of 4300 bits. This demand supports the expansionary plans, right? Because there's a lot of demand coming in and insurance penetration is like very good. The health Premiums grew from 2.5 lakh crores to 2.9 lakh crores. And 41% of the Indian families now have coverage, right? And a quarternary care shift as has also been seeing a good move like more complex procedures are leading into higher revenue per patient with less price regulation. And this increase or this rate revision in CGHS will also give more room for the hospitals as they are getting. Because the difference between a normal patient and a CGHS patient the gap is very huge right now as government is supporting the hospitals has revised the rates which happened after 15 years is a good strength to the hospitals also to further plan their expansionary plans. Okay? And if you look at company specific exposure like Yadaarth Hospital have an exposure of around 35 percentage and they are expecting around 8 to 12 percentage in their revenue up move EBITDA margins around 400 bips, right? 400 basis points. And this is highly sensitive to the CGHS rates, right? Because they have a higher exposure to the government schemes next to max healthcare have a 22 percentage exposure and they are more dominant in north India. And the margins they're expecting an uplift of around 5 to 8%. Narayana Rudyalaya Yes, a very good company for the long term should be tracked on a weekly or on a monthly time frame. On trading view have an exposure of around 20%, 4 to 6% they can expect a revenue jump and 250 basis points on the EBITDA margins. It can have an impact and this hospital is more like a low cost and they focus more on high volume, right? They focus more on the volume game. Next we have Kim's 18% exposure to government schemes Apollo Hospitals 10 percentage and Fortis Healthcare we have like 12 percentage exposure to the government scheme. Now as you see because of the CGHS rate Revision almost a 400 basis points margin impact will be having on the hospital stocks which is a good move and this also caters for the expansionary plans of the hospitals. So Yadarth, if you see Yadaarth Hospital right Now approximately around 1100 beds they are planning to increase to 3000 beds almost like a 3x in the next 3 years by FY 2028 they're expecting they are targeting at a 28 percentage year on year growth compounded annual growth rate. And the investment outlay is around 1200 to 1500 crores right? So. So we have a greenfield capex and we also have a brownfield capex. So greenfield capex means someone who is starting out from the scratch someone who are starting or investing from the roots And a brownfield capex means already existing unit is there, they are starting another unit so the funds are going to the new unit, right? Existing and building on the second. So majority of these hospitals are going ahead with the brownfield capex brownfield capital expenditure. And you see hospitals like Max Healthcare from 1900 current beds to 3400 and Apollo Hospitals 4300 to 7600. And the investment overlay or the investment outlay the expected a capital expenditure which is coming is almost to the tune of 3000 to 4000 crores in Apollo Kim's from 2400 current bids to 3500 bids they are targeting right? And the entire overview of the sector if you see with the current per capita income right 4 percentage government itself will focus to increase the spending on hospital sector and healthcare affordability is improving and private spending has also seen a very good move. And when the entire sector, the hospital sector itself is growing at a 9 to 11 percentage and expected to touch 16 trillion by 2028 there are many opportunities also in this segment. Medical tourism growing at a double digit growth, right? Countries like US Europe when the charges are very high people Are flying over to India to get their medical treatments done. Because we are like more affordable, right? And when India is scattering at 1/10 of the US procedure cost, definitely it makes more sense for them to come here and get treated. And the quality of health care is improving in India now as government is also supporting the hospitals with the rate revision cghs as they have more open wings, they can even provide a better qualitative health care. And that will attract more on the medical tourism as well. Insurance penetration or even the urbanization trend increase and digital adoption. Now as you see majority of the hospitals even like Apollo Hospital, right? Apollo 247 is reaching over 4 crore users. 40 million users, right? The telemedicine is also scaling rapidly. So these are all the growth drivers which is resulting in the market expansion for the hospital stocks, right? So now the question is will the Indian hospital sector with all these opportunities with a key growth catalyst of CGHS rate revision, will it result in next bull run or does it require more A catalyst to improve is what time will say, right? And even if I'll just go to a trading view, right? Let's go to trading view. And if you look at the combined strength of the entire hospital sector, so what we can do, I'll just for the case study purpose, I'll just enter Yadart hospital and on top of it I will also add Aster DM Healthcare and I will also add Kims. I'll add Narayana Hodialaya Ltd. I'll also add Apollo hospitals. Yes. And what I will do just for the discussion purpose, I've taken 1, 2, 3, 4 and 5. You can even add more. So I'll divide it by five. So what I am doing, instead of taking individual stock strength, I've taken five stocks within the hospital segment. And I am taking the average strength of all the five stocks. And if you look at it clearly, there is a very good uptrend we are able to see, right? So this is something where a clear uptrend is being formed. And even the average strength of these five stocks also if you see if I just draw resistance zone. Yes. It's clearly at a very very good breakout, right? It's clearly at a very good breakout. Or it's at a very good resistance zone, right? So hospital sector is something where it's a long term trend. Right? Where it's a long term trend. So what I want you to do in the comments, let me know what is your thought process on hospital related sector. Will the increase in medical tourism, will the boom in medical to medical tourism will help the hospital related stocks to move? Will the rate revision in CGHS which has been implemented as on October 13, 2025, will it help or are there any other reasons which you think would help the hospital sector to move? And one of the important reason which I also feel is the funds released from the government to the hospitals should also be much faster to facilitate the fund flow. Because for any company, any hospital, any business, fund flow is very very important. The faster they receive the amount, it will be helping them to produce more, right? This is one thing which you need to so type below in the comments. What is your thought process on hospital sector? Is it a short term? Is it a long term? And within the hospital sector, what are all the stocks which you are tracking? Or what are all the stocks which you have invested? Or what are all the stocks which you are preparing a watchlist to take entries, type below right, type below and also let me know what is that sector or a topic which you want me to do a detailed deep dive analysis. Okay? Till then take care and if you have not yet subscribed to our channel, subscribe and any new video you will get a notification. Thank you.