The healthcare sector has bounced back and the brokerage firm, Nuvama Institutional Equities has identified its top stock picks in this space. According to the brokerage report, hospitals and diagnostics have shown strong signs of recovery in the first quarter of FY26.
“Revenue, EBITDA and profit for the sector grew 17%, 24% and 30% year-on-year, with margins expanding nearly 120 basis points,” the brokerage noted in its report, pointing out that both hospitals and diagnostics staged a healthy rebound. Let’s take a look at the brokerage top pick in this sector –
Nuvama’s top picks in Pharma and Healthcare
Nuvama has placed its bets on a few standout names in the healthcare sector. Its top picks include:
Vijaya Diagnostic – Strong volume-led growth and expansion into newer markets.
Metropolis Healthcare – Benefiting from stabilised pricing and structural industry tailwinds.
Apollo Hospitals – A long-term play backed by its scale, strong brand, and ongoing capacity additions.
Here’s what the brokerage has say on the dynamics in the sector –
Hospitals: Bed expansion drives growth
Hospitals turned in a strong performance in Q1FY26 despite seasonal challenges and lower inflow of international patients. The growth, according to Nuvama, was primarily volume-led, supported by new bed additions at players such as Max, KIMS and Medanta.
“Hospitals revenue and EBITDA expanded 18% and 21% YoY, beating estimates,” the brokerage noted. While Fortis and Jupiter Life delivered steady double-digit ARPOB growth, Apollo’s performance was seen as relatively subdued.
Furthermore, the brokerage believes the hospital sector is poised for sustained high growth. “Aggressive bed addition plans, especially through brownfield expansions, will support long-term growth, even as existing hospitals ramp up utilisation,” the report added.
Diagnostics: Healthy rebound in volumes
After facing seasonal weakness, diagnostics players regained momentum in Q1FY26. According to the report, Vijaya Diagnostic, Dr Lal PathLabs, and Metropolis Healthcare all delivered strong results, with growth being largely volume-driven.
“Vijaya’s volumes rose 17% YoY, followed by 11% growth for Dr Lal and 8% organic growth for Metropolis,” Nuvama said.
The brokerage added that structural tailwinds remain intact, including rising chronic ailments, an ageing population, and deeper penetration into tier-II and tier-III cities.
Margin picture: Fortis leads the pack
Fortis stood out with an improved margin profile. This leads to upward revisions in its FY26 and FY27 earnings estimates by 6% and 7% respectively.
However, KIMS faced slight earnings cuts due to expansion-led margin pressure.
Among diagnostics companies, Nuvama revised up its earnings forecasts for Dr Lal (4%/4%) and Metropolis (1%/2%) while Vijaya saw a marginal cut due to higher costs from its expansion plans.