Dear All,
Forwarding you the Result Update on GSK Consumer for 1QCY2011 with a Reduce recommendation.
For 1QCY2011, GSK Consumer posted numbers largely in-line with our estimates. The top line came in below our estimates at `710cr, a growth of 9.5% yoy. On the operating front, the company recorded flat margins. Earnings for the quarter grew by 15% yoy to `110.6cr (`96.2cr). We downgrade our rating on the stock to Reduce from Accumulate.
Steady top line; margin expands: GSK Consumer registered a single digit top-line growth of 9.5% yoy to `710.1cr (`648.4cr), aided by ~6.5% volume (below our expectation) and ~5% value growth (in-line with our expectation). The company’s operating margin remained flat during the quarter at 20.5% despite gross margin expansion, on account of higher staff cost and other expenses. Earnings registered growth of 15% yoy, aided by higher other income and a marginal dip in tax rate.
Outlook and valuation: We have tweaked our numbers post the results. At the CMP, the stock is trading at 24.3x CY2012E EPS of `98.3, which is ~40% higher to its 5yr average P/E of 17.4x. Moreover, at current levels the stock is trading at ~80% premium to Sensex (same level as April, 2002) which we believe is not sustainable. Hence, we recommend Reduce view on the stock.
Kindly click on the following link to view the Report.
If you have any further queries, feel free to call us on 022 39357600, Extn: 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,6th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600 Ext. 6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
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