JP Morgan downgrades Apollo Hospitals to 'neutral' on muted growth outlook

NEW DELHI: JPMorgan downgraded Apollo Hospitals from ‘overweight’ to ‘neutral’ rating, the global investment bank said in a report. The brokerage firm has also slashed its price target from Rs 925 earlier to Rs 900.

Earlier in the week, Chennai-based Apollo Hospitals posted a 27.3 per cent rise in its fourth-quarter stand alone net profit, helped by exceptional items and a tax benefit.

The company reported a net profit of Rs 75.5 crore, compared with Rs 59.3 crore in the same period last year.

JPMorgan believes that the current stock levels reflect the growth potential from hospital expansion as well as margin enrichment from mature hospitals.

Further multiple expansion would need catalysts such as divestment of pharmacy business and/or exit from non-core insurance JV.

In a separate note, Nomura has also downgraded Apollo Hospitals to ‘neutral’ and has slashed its target price to Rs 933 from Rs 950 earlier.

While Barclays has maintained an ‘equalweight’ rating on the stock with a target price of Rs 968 post earnings for the quarter ended March 2013.