Connect with us

Hi, what are you looking for?

Share Market

Analyst Corner: Maintain ‘add’ on GSK Pharma with TP of Rs 1,613

Financial Express - Business News, Stock Market News

Lower employee and S,G&A expenses cushioned the drop in Ebitda margin to 140 bps y-o-y.Lower employee and S,G&A expenses cushioned the drop in Ebitda margin to 140 bps y-o-y.

Inline performance: Revenue grew 4.9% y-o-y during the quarter as acute therapies witnessed recovery with falling Covid-19 cases. Although, recent surge in cases may have some near term pressures we expect recovery in the growth to continue with traction in key brands supported by healthy growth in recently launched products (Fluarix Tetra and Menveo) especially with the ongoing vaccination. Gross margin dropped 540 bps y-o-y on a very high base of last year but it was largely stable sequentially. Lower employee and S,G&A expenses cushioned the drop in Ebitda margin to 140 bps y-o-y.

Company has impaired Vemgal by Rs 1.19 billion to reflect the estimated realisable value of Rs 1.8 billion at which it is being sold to Hetero. Hence, reported PAT declined 89.6% y-o-y. Adjusting for it PAT fell 20.0% y-o-y to Rs 1.0 billion.

Key products performance: As per AIOCD data, GSKP has reported a flattish y-o-y performance. T-Bact, Betnovate N and Betnovate C have reported healthy y-o-y growth of 30.5%, 41.3% and 34.9%, respectively for the quarter. However, Augmentin, Synflorix, Calpol and Betnesol have reported a y-o-y decline of 16.9%, 25.6%, 16.3% and 3.5%, respectively. Infanrix Hexa continues its strong momentum with 10.1% y-o-y growth. Fluarix Tetra and Menveo are tracking well with revenue of Rs 19 million and Rs 61 million, respectively during the quarter.

Outlook: While FY21 performance would optically appear muted, its due to Zinteac (ranitidine) sales in the base. However, we expect FY22 to report a strong growth both on revenue and earnings front. We expect 10.1% revenue and 24.2% PAT CAGR over FY21-FY23E driven by growth in power brands, traction in newly launched products and recovery in key therapies like vaccines, respiratory and VMN. Minimal capex requirement would aid cashflow generation of ~Rs16bn over the next two years.

Valuations and risks: We largely maintain our revenue estimates but raise our EPS estimates by 2-3% for FY22E-FY23E to factor in higher other income. Maintain ADD with a revised target price of Rs1,613/share based on 40xFY23E earnings (earlier: Rs1,575/share). Key downside risks: addition of key drugs in NLEM, product concentration.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Click to comment

Leave a Reply

Your email address will not be published.

You May Also Like


Cybercriminals Adopt the Blockchain to Broadcast confidential Messages A group of analysts from SophosLabs represents that programmers working the crypto-jacking malware, Glupteba, have been...


PUBG unban in India soon as PUBG Corp. Will The Government Of India Unban PUBG? PUBG Mobile was Ban in India, PUBG organization has...


A standard method to execute Bitcoin could be powerless against double-spending, the new examination has found. Blockchain sleuths at ZenGo, a wallet startup, have...

BlockChain News

HDD mining, also known as “storage mining”, is a process of obtaining cryptocurrency based on hard disk memory. Compared with traditional POW mining, hard...