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Glaxosmithkline Pharma Ltd Research Report - 10th Jun 2016

Pharmaceutical | Published on Jun 10th 2016

IT

For 4QFY2016, GlaxoSmithKline Pharmaceuticals (GSK)’s sales rose by Rs686cr, up 11.8% yoy. On the operating front, the gross margin and the EBITDA margin came in at 55.0% and 17.8% respectively V/s 57.1% and 19.4% during the corresponding period of the previous year. The reported net profit for the quarter thus came in at Rs106cr V/s Rs103cr in 4QFY2015, ie a yoy growth of 3.0%. The Adj. net profit for the quarter came in at Rs95cr V/s Rs107cr in 4QFY2015, a dip of 10.6% yoy. We remain Neutral on the stock. Results below our expectations: The company posted an unimpressive performance for 4QFY2016. The company posted sales of Rs686cr (V/s `828cr expected), a growth of 11.8% yoy. On the operating front, the gross margin and the EBITDA margin came in at 55.0% and 17.8% respectively V/s 57.1% and 19.4% during the corresponding period of the previous year. The OPM came lower than our expectations of 19.6%, weighed down by a lower gross margin on a yoy basis. The reported net profit for the quarter thus came in at Rs106cr V/s Rs103cr in 4QFY2015, ie a yoy growth of 3.0%. The Adj. net profit for the quarter came in at Rs95cr V/s Rs107cr in 4QFY2015, a dip of 10.6% yoy. Outlook and valuation: The company has a strong balance sheet with cash of ~Rs2,000cr, which could be used for future acquisitions or higher dividend payouts. On the operational front, we expect the company’s net sales to post a CAGR of 19.0% to Rs3,881cr and EPS to register a mere CAGR of 21.6% to Rs65.3 over FY2016–18E. We remain Neutral on the stock.

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CMP 3,515
Target Price
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)22,998.59
MCAP NSE (Rs in Cr)23,051.53
P/E (x)66.34
EPS (Rs.)40.93
BV (Rs.)219.95
Div Yield (%)1.84
FV (Rs.)10.00
P/BV (x)12.34
EV/Sales (x)7.95
EV/EBITDA (x)68.53

Shareholding Pattern (%)

Promoter75.0
Public & Others12.0
Institution10.0
Foreign2.0
Corporate1.0
Grand Total100.0

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