CRISIL Research is of the view that hospital projects represent long term investment opportunities. The attractive returns earned by such projects coupled with the shortage of hospital beds in the country support our view. We have computed the project internal rate of return’s (IRR) of a multi-speciality, tertiary care hospital under three scenarios with differing assumptions on occupancy rates, land costs, escalation rate of revenue per patient and land costs in each scenario. In our base case scenario, an investment in a tertiary care, multi-speciality hospital would have a project IRR of 16.4 per cent. Even in our bearish case the project IRR remains relatively healthy at 11.6 per cent, while in our optimistic case it rises to an attractive 19.9 per cent.
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