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Glaxosmithkline Pharma Ltd Research Report - 18th Feb 2016

Pharmaceutical | Published on Feb 18th 2016

IT

For 3QFY2016, GlaxoSmithKline Pharmaceuticals (GSK Pharma) posted a disappointing operating performance. For the quarter, the company posted sales of Rs729cr (V/s Rs730cr expected), a growth of 12.8% yoy. On the operating front, the company posted a gross margin of 53.1% V/s 55.6% in the corresponding period of the previous year. The OPM came in at 14.1% V/s 17.0% during the corresponding period of previous year, mainly owing to lower gross margin on a yoy basis. This was against our expectations of 18.1%. Thus, the reported net profit came in at Rs82cr V/s Rs55cr in the corresponding period of last year. However, the Adj. net profit came in at Rs80cr V/s Rs45cr in 3QFY2015, a yoy growth of 76.4%. We remain Neutral on the stock. Results below our expectations: For 3QFY2016, the company posted a disappointing operating performance. For the quarter, the company posted sales of Rs729cr (V/s Rs730cr expected), a growth of 12.8% yoy. On the operating front, the company posted a gross margin of 53.1% V/s 55.6% in the corresponding period of the previous year. The OPM came in at 14.1% V/s 17.0% during the corresponding period of previous year, mainly owing to lower gross margin on a yoy basis. This was against our expectations of 18.1%. Thus, the reported net profit came in at Rs82cr V/s Rs55cr in the corresponding period of last year. However, the Adj. net profit came in at Rs80cr V/s Rs45cr in 3QFY2015, a yoy growth of 76.4%. We remain Neutral on the stock. 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 9.8% to Rs3,158cr and EPS to register a mere CAGR of 6.6% to Rs68.3 over FY2015–17E. We remain Neutral on the stock.

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CMP 3,195
Target Price
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)23,145.12
MCAP NSE (Rs in Cr)23,203.14
P/E (x)66.76
EPS (Rs.)40.93
BV (Rs.)219.95
Div Yield (%)1.83
FV (Rs.)10.00
P/BV (x)12.42
EV/Sales (x)8.00
EV/EBITDA (x)69.00

Shareholding Pattern (%)

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

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