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Most hospitals expect double-digit revenue growth in FY2022

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The hospital sector witnessed a spike in Covid-19 occupancies during Q1 FY2022 in line with the active cases in India that touched an all-time high in May 2021, peaking at more than 4x the first wave peak.

The overall occupancy levels were supported by longer average length of stay for Covid patients even as localised lockdowns resulted in a sequential decline in non-Covid occupancies to a certain extent.

The blended occupancy of both Covid and non-Covid patients for ICRA sample set stood higher at 64.2 per cent in Q1 FY2022 (against 36.9 per cent in Q1 FY2021 and 58.8 per cent in Q4 FY2021), an ICRA report said.

Most multi-speciality hospitals derived 25-30 per cent of their Q1 FY2022 footfalls and revenues from Covid-19 treatments and vaccination drives. While the Y-o-Y revenue growth of 129 per cent in Q1 FY2022 for ICRA sample set was optically high aided by the low base, the Q-o-Q revenue growth was also healthy at 15 per cent.

However, higher share of revenues from Covid treatments resulted in a 4.2 per cent Q-o-Q contraction in the average revenue per occupied bed (ARPOB) in Q1 FY2022, even as complex nature of infections and higher proportion of patients requiring critical care treatment and oxygen support aided Y-o-Y growth of 8.7 per cent in ARPOB.

Operating leverage benefits in addition to incremental revenues and margins from vaccination drives and Covid tests resulted in an improvement in OPM for ICRA sample set to 19.3 per cent in Q1 FY2022 (against -9.3 per cent in Q1 FY2021 and 18.4 per cent in Q4 FY2021), the highest witnessed by the sample set in the last few years. This was despite absence of revenues from international patients.

Says Mythri Macherla, Assistant Vice President and Sector Head, ICRA, “While both in-patient (IPD) and out-patient (OPD) footfalls declined sequentially in Q1 FY2022 on account of Covid 2.0, footfalls were far higher than Q1 FY2021, wherein hospital operations were adversely impacted on account of the nationwide lockdown. Most hospitals have witnessed sequentially higher footfalls in July and August 2021 compared to Q1 FY2022 levels.”

“To assess the on-ground sentiments and understand the outlook for FY2022, ICRA conducted a survey of its rated hospital entities. Key findings suggest that with strong performance in Q1 FY2022 and expected benefits from pent-up demand for electives, respondents expect occupancies in FY2022 to be better than FY2020 levels and ARPOB to remain range-bound in FY2022 despite higher contribution from Covid. More than 2/3rd of the survey respondents expect double-digit growth in revenues in FY2022, and OPM to revive and be higher than FY2020 levels on the back of healthy improvement in occupancy levels.”

The net debt for ICRA sample set increased by Rs 350 crore as on June 30, 2021, compared to March 31, 2021 on account of advance payments for vaccine procurement and higher pharmacy stocking of Covid medicines.

In terms of capex, many companies in the sector have gone slow on greenfield expansion in the last few years as the focus was on improving returns on existing facilities.

Players are now looking at adding bed capacity within the existing infrastructure, and some of the larger players are actively scouting for inorganic growth opportunities. However, owing to the healthy cash generation and strong liquidity position, the interest coverage ratio is projected to improve.

The Government of India and the Reserve Bank of India have taken multiple measures to support the sector, including an on-tap liquidity window, dedicated ECLGS credit lines, etc. which is likely to support liquidity of industry players.

Business

Sensex, Nifty end lower over monthly Futures and Options expiry

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Mumbai, Nov 25: Indian stock markets ended in the red on Tuesday as traders reacted to the monthly expiry of Nifty futures and options contracts for the November series.

The Sensex closed 313.7 points lower at 84,587.01, a decline of 0.37 per cent. The Nifty also slipped, ending 74.7 points or 0.29 per cent down at 25,884.8.

“On the Nifty options front for the upcoming weekly expiry on December 2, significant call buildup was recorded at the 26,000 and 26,200 strike levels, while on the put side, notable additions were seen at the 26,000 and 25,500,” experts said.

Among key stocks on the Sensex, Trent, Tata Motors PV, HCLTech, Infosys and Power Grid were the top losers.

On the other hand, Bharat Electronics Ltd (BEL), State Bank of India (SBI), Tata Steel and Eternal were among the major gainers.

Sector performance was mixed. The Nifty Realty index gained 1.62 per cent, making it the best-performing sector of the day, while Nifty PSU Bank rose 1.44 per cent.

However, Nifty IT fell 0.57 per cent and Nifty Media dropped 0.80 per cent.

Broader markets were more resilient than the frontline indices. The Nifty Midcap 100 index gained 0.36 per cent, while the Nifty Smallcap 100 added 0.19 per cent — showing continued buying interest in mid- and small-cap stocks.

Market experts said the expiry-related volatility and profit booking weighed on benchmarks, while select sectors continued to see fresh inflows ahead of December trading sessions.

“Caution prevailed as investors awaited clarity on a possible rate cut in the upcoming FOMC meeting and progress on the Indo-US trade deal, despite some improving signals,” analysts said.

They added that selling pressure is visible near the 26,000 level, though downside appears limited given strong domestic fundamentals, including a solid earnings outlook for H2.

“PSU banks and real estate stocks outperformed, supported by a strong revival in home loan demand and rising market share for PSU banks,” analysts mentioned.

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India’s infrastructure market expected to hit Rs 25 lakh crore by 2030: Report

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New Delhi, Nov 25: India is entering a multi-year infra super-cycle, with the Nifty Infrastructure index delivering 2 times returns of the Nifty 50 over the past three years, a report said on Tuesday.

India’s infrastructure equities have evolved from defensive to high‑beta, high‑alpha and could nearly double in market size by 2030 to around Rs 25 lakh crore, the report from Smallcase said.

Analysts said that the growth is driven government spending and private capex revival — helped by PLI schemes, global supply-chain shifts, and manufacturing incentives.

Smallcase estimated that Rs 1 of infrastructure capex delivers roughly Rs 2.5 — Rs 3 of GDP impact.

Markets are likely to maintain a high beta to infrastructure execution; earnings visibility across engineering, construction, industrials, cement, power equipment and logistics remain robust, the report noted.

InvITs growth will be underpinned by predictable, contract-based revenue streams offering pre‑tax yields of about 10–12 per cent and post‑tax returns near 7–9 per cent generally higher than many conventional fixed-income instruments.

The Nifty Infrastructure Index returned 14.5 per cent, 82.8 per cent and 181.2 per cent over the past 1, 3 and 5 years, outperforming the Nifty 50’s 10.5 per cent, 41.5 per cent and 100.3 per cent, the report said.

“Though Infrastructure investment in India Although these assets can experience temporary fluctuations during periods of market uncertainty, their historical volatility of about 10.2 per cent is well below the equity market’s 15.4 per cent, resulting in comparatively steadier performance,” said Abhishek Banerjee, Investment manager on smallcase, and founder of LotusDew.

With a correlation of only 0.42 to equities, infrastructure platforms tend to behave similarly to utilities, producing consistent, inflation-linked income that is largely unaffected by economic swings, he added.

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Business

New initiative aims to strengthen India’s homegrown cyber resilience

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New Delhi, Nov 25: The government has launched a landmark Cyber Security Innovation Challenge (CSIC) 1.0 for students and researchers to work upon real-world cyber challenges, positioning the field as a viable career path and strengthens India’s homegrown cyber resilience.

The initiative, launched under the Information Security Education and Awareness (ISEA) project of MeitY, aims to building not only skilled professionals and positioning cyber security as a viable career path, but also catalysing homegrown, product-oriented solutions.

S. Krishnan, IT Secretary, emphasised the need for a two-pronged national cyber security strategy — expanding awareness of emerging threats while strengthening technological capabilities. He highlighted that CSIC 1.0 addresses both imperatives.

Krishnan said that cyber security demands a ‘whole-of-nation’ approach, echoing Prime Minister Narendra Modi’s vision of a ‘whole-of-government’ strategy.

Acknowledging the collaborative presence of MeitY, CERT-In, NSCS, AICTE, C-DAC, DSCI, and leaders from academia and industry, he stressed the importance of nurturing winning ideas beyond the Minimum Viable Product (MVP) stage, creating pathways for them to evolve into scalable solutions through collaboration with startups and industry partners.

Vinayak Godse, CEO, Data Security Council of India, provided an engaging walkthrough of CSIC 1.0’s five-stage structure and extensive problem statements, developed through months of intense deliberation between DSCI, C-DAC, and the ISEA team.

He highlighted that this first-of-its-kind initiative enables students and researchers to innovate and develop entrepreneurial mindsets from the early stages.

Professor V Kamakoti, Director IIT Madras, mentioned that the innovation challenge under ISEA Project highlights our enhanced understanding of core challenges and positions us to craft transformative solutions.

The 10 domain specific problem statements highlight areas which are aligned to the cyber security needs of the nation and require fresh, innovative thinking.

Dr Sanjay Bahl, Director General, CERT-In, highlighted ISEA’s critical role in fostering innovation that shifts the paradigm from reactive defense to proactive security.

He noted that the Innovation Challenge creates a vital platform uniting R&D, academia, and industry, with solutions from academic institutions envisioned to reach the market as deployable products.

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