Healthcare sector to see 15 pence revenue growth in FY17: Ind-Ra

This will be supported by the country's huge population, which is increasingly gaining access to health insurance as the public healthcare system is not adequate and perceived to be of lower standard, it said.

Ind-Ra believes that established brands will continue to benefit from their ability to attract reputed doctors as well as patients that will help increase the occupancy levels of hospital beds.

Cash flow from operations margins of companies in the sector will continue to be under pressure due to the initial losses at the new facilities or lower profitability during their ramp-up phase.

This is due to the high operating leverage in the sector, it said.

Also, any improvement in profitability would require a quick scaling-up in patient numbers and capacity utilisations.

Free cash flow will continue to be negative due to the continued capital expenditure of the healthcare companies.

Ind-Ra expects large corporate hospital chains' ability to withstand the strain created by the expansion plans to be better than standalone hospitals or smaller chains.

This is because the established profitable hospitals of such chains provide a cushion to absorb the negative cash flows of the new facilities, it said.