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GlaxoSmithKline Pharma 1QFY2015 performance highlights and results update

August 14, 2014, Thursday, 19:44 GMT | 14:44 EST | 00:14 IST | 02:44 SGT
Contributed by Angel Broking


Glaxo SmithKline Pharmaceuticals (Glaxo) announced its 2QCY2014 numbers, which are below our expectations on the OPM and net profit front. On the other hand the revenue for the quarter came in in line with our expectations. The company posted a revenue of Rs.655cr (V/s an expected Rs.660cr), up 2.8% yoy.The EBITDA margin came in at 16.7% (V/s an expected 19.8%), dipping by 116bp yoy. Thus, the PAT came in at Rs.98.2cr, a dip of 3.4% yoy. We maintain our Neutral rating on the stock.

Results below our expectations: Glaxo announced its 2QCY2014 numbers, which are below our expectations on the OPM and net profit front. On the other hand the revenue for the quarter came in in line with our expectations. The company posted a revenue of Rs.655cr (V/s an expected Rs.660cr), up 2.8% yoy. The EBITDA margin came in at 16.7% (V/s an expected 19.8%), dipping by 116bp yoy. This was mainly on back of the gross margin dip, which came in at 51.5% V/s 53.6% during the corresponding period of the previous year. The staff cost and other expenditure on the other hand posted a mere 3.4% yoy growth and a dip of 2.1% respectively. Thus, the PAT came in at Rs.98.2cr, a dip of 3.4% yoy.

Outlook and valuation: Glaxo has a strong balance sheet with cash of ~Rs.2,000cr, which could be used for future acquisitions or higher dividend payouts. On the operational front, we expect Glaxo’s net sales to post a CAGR of 6.0% to Rs.2,853cr and EPS to register a mere CAGR of 0.4% to Rs.59.4 over CY2013–15E. At current levels, the stock is trading at 46.1x and 42.3x CY2014E and CY2015E earnings, respectively. We remain Neutral on the stock.