Global brokerage Jefferies expects India's listed hospital chains to enter a capacity-led growth phase in CY26, with fresh bed additions beginning to meaningfully lift volumes after a muted expansion cycle over the past few years. However, the brokerage emphasizes that execution will be the key differentiator, advising investors to stay selective in their approach.

Top Picks and Growth Projections

Jefferies has named Max Healthcare and Fortis Healthcare as its preferred investment choices in the hospital sector. The brokerage projects strong earnings growth for both companies:

The brokerage has rolled forward its price targets for both companies based on these growth expectations.

Capacity Expansion Timeline

New bed additions across listed hospital chains are set to accelerate in CY26, following a relatively subdued expansion period. The expansion plans show significant scale across major players:

Medanta's next phase of expansion is still a few years away, according to Jefferies. The brokerage notes that the pace of ramp-up, including occupancy rates, margin profile, and break-even timelines, will determine near-term financial performance and stock returns.

Volume Growth Over Pricing Strategy

Jefferies identifies volume growth as the key theme for CY26, expecting it to take precedence over ARPOB (average revenue per occupied bed) expansion. As new capacity comes online, hospitals may initially prioritize occupancy, potentially accepting a softer payer mix. The brokerage expects mid-single-digit ARPOB growth at best in CY26, with lower pricing power reflecting a tougher reimbursement environment.

Brownfield expansions offer a strategic advantage, as these beds come with lower incremental costs and can offset some margin pressure even if the payer mix deteriorates temporarily. Jefferies clearly prefers brownfield-led expansion strategies:

• Max Healthcare: 67% of new beds from brownfield projects
• Fortis Healthcare: 72% of new beds from brownfield projects
• Apollo and Medanta: More greenfield-heavy approach with higher costs and 1-3 year ramp-up periods

CGHS Rate Revision Impact

The revision in CGHS rates, effective from Q3FY26, represents a positive catalyst that will become more visible in CY26 numbers. Max Healthcare is positioned as the biggest beneficiary, followed by Fortis and Medanta:

Other hospital chains are yet to fully quantify the impact of the CGHS rate revision.

Overcapacity Concerns Dismissed

Despite aggressive bed addition plans over the next five years, Jefferies does not expect an overcapacity scenario. The brokerage projects aggregate listed hospital capacity to grow at about 5% CAGR, far lower than headline announcements suggest. Operational additions are also likely to lag announced capacity due to staggered commissioning. Jefferies dismisses overcapacity concerns as a 'hospital sector paradox,' indicating confidence in the sector's ability to absorb the planned capacity additions effectively.

Jefferies India Strategy head Mahesh Nandurkar expects a significant revival in corporate India's revenue momentum during the December 2025 earnings season, with stocks across autos, cement, telecom and oil & gas sectors positioned to dominate quarterly results. The brokerage forecasts revenue growth to reach an 11-quarter high of approximately 14% year-on-year for its coverage universe excluding global commodities, anchoring similar pace of Ebitda and earnings growth.

Auto Sector Leads Growth Momentum

Auto stocks emerge as key beneficiaries of the earnings surge, supported by GST rate cuts that have boosted discretionary consumption demand. Jefferies projects auto OEMs will report a robust quarter with the following performance metrics:

Property and real estate stocks are also in focus as improving construction activity, supported by normalising weather conditions, drives strong sales momentum.

Cement, Telecom And Oil Stocks Show Strong Performance

Cement, telecom and oil marketing companies are expected to sustain robust earnings growth of 30% or more. The cement sector benefits from multiple positive factors including stronger industry volume growth, steady costs and improved pricing dynamics.

Oil marketing companies are projected to report sharp year-on-year jumps in Ebitda, driven by elevated marketing margins and firm refining spreads amid lower crude prices.

Domestic Companies Drive Operational Performance

Domestic-facing companies, excluding financials, are set to lead operational performance with Ebitda growth estimated at approximately 16% year-on-year. This represents an improvement of nearly 4 percentage points sequentially, backed by a 17% year-on-year rise in revenues—the strongest performance in 11 quarters.

Autos and property developers are expected to witness over 20% revenue growth with substantial sequential improvement, while electronics manufacturing services players including Dixon, Syrma and Kaynes are projected to post Ebitda growth exceeding 25% on strong topline momentum.

Mixed Margin Trends And Sector Outlook

Margin trends remain mixed across sectors, with Ebitda margins for domestic companies forecast to decline by around 0.50 percentage points quarter-on-quarter to a 12-quarter low. However, specific sectors show varied margin performance:

L&T's Ebitda is projected to rise 14% year-on-year on similar revenue growth. In contrast, bank stocks are likely to post a softer quarter with profits rising only about 3% year-on-year, though sequential improvement is expected as net interest margin pressures ease and credit costs normalise.

Cautionary Factors And Broader Outlook

Jefferies cautions investors to monitor labour cost-related one-offs this quarter, as companies may create provisions for higher gratuity and leave liabilities under new labour codes. While these could temporarily weigh on reported earnings, the broader picture remains supportive for stocks leveraged to domestic demand, construction activity and discretionary consumption going into 2026.

IT stocks may see revenue growth moderate to about 1.20% quarter-on-quarter in constant currency with earnings growth of around 8% year-on-year, while FMCG staples are expected to deliver modest profit growth of approximately 6%.