GlaxoSmithKline Pharma - RU1QCY2011 - Neutral

Dear All,

 

Forwarding you the Result Update on GlaxoSmithKline Pharma for 1QCY2011 with a Neutral recommendation.

For 1QCY2011, GlaxoSmithKline Pharma’s (Glaxo) results were below our estimates on the top-line and margin front, but higher on the PAT front. We remain Neutral on the stock.

Operating performance below estimates: Glaxo reported net sales of `603cr (`541cr), up 11.4% yoy, lower than our estimates of `611cr. In terms of segmental performance, the vaccines and mass specialty business reported double-digit yoy growth during the quarter. The pharma business reported 12.4% yoy growth during 1QCY2011. Glaxo reported OPM of 35% (37%), below our estimates of 37.9% for 1QCY2011. Gross margin for the quarter declined to 61.8% (62.5%). The company reported net profit at `0.5cr (`161.2cr), down 99.7% yoy. This was mainly due to exceptional items of `185.9cr during the quarter. Post the adjustment for the exceptional items, net profit grew by 15.6% yoy to `186.3cr (`161.2cr), higher than our estimate of `171.5cr.

Outlook and valuation: We expect net sales to post a 13.9% CAGR to `2,788cr and EPS to register a 14.6% CAGR to `86.9 over CY2010–12E. At current levels, the stock is trading at 31.8x and 26.3x CY2011E and CY2012E earnings, respectively. We maintain our estimates and, hence, remain Neutral on the stock.

 

Kindly click on the following link to view the Report.

 

GlaxoSmithKline Pharma - RU1QCY2011

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