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GlaxoSmithKline Pharma 4QCY2012 performance highlights and results update

Contributed by Angel Broking

GlaxoSmithKline Pharma (Glaxo) reported its 4QCY2012 results, just-in-line with estimates on the top-line and OPM fronts, which came in at Rs.657cr and 27.2% respectively. The net profit came in at Rs.159cr, higher than an expected Rs.132cr, registering a growth of 7.6% yoy. We continue to maintain our Neutral view on the stock.

Just in-line results on sales and OPM front: For 4QCY2012, Glaxo reported a 16.1% yoy growth in its net sales to Rs.657cr, more or less in line with our estimate of Rs.680cr. The company’s gross margin came in at 57.3%, ie in line with our estimate of 57.4%. This aided the OPM to come in at 27.2% (in line with our estimate of 26.8%) for 4QCY2012. During the quarter, Glaxo reported a growth of 7.6% yoy in its adjusted net profit to Rs.159cr, higher than our expectation of Rs.132cr.

Outlook and valuation: We expect Glaxo’s net sales to post a 13.0% CAGR to Rs.3,319cr and EPS to register a 4.1% CAGR to Rs.86.7 over CY2012–14. At current levels, the stock is trading 27.2x and 24.5x CY2013E and CY2014E earnings, respectively. We remain Neutral on the stock.