GlaxoSmithKline Pharma - 1QCY2012 Result Update - Angel Broking

GlaxoSmithKline Pharma (Glaxo) reported its 1QCY2012 results. The company's results were lower than estimates on the top-line as well as bottom-line front. Disappointment on the net profit front was mainly on the back of lower-thanexpected sales and OPM. The company's OPM for the quarter came in at 31.4%, lower than our expectation of 34.3%. We continue to maintain our Neutral view on the stock.

Results below expectations: For 1QCY2012, Glaxo reported 3.3% yoy growth in its net sales to Rs.623cr, below our estimate of Rs.697cr. The company's gross margin came in at 57.9%, lower than our expectation of 61.1%. This led to OPM of 31.4%, below our estimate of 34.3%. During the quarter, Glaxo reported a 38.0% yoy decline in its net profit to Rs.187cr, below our expectation of Rs.200cr.

Outlook and valuation: We expect Glaxo's net sales to post a 12.2% CAGR to Rs.2,993cr and EPS to register an 8.7% CAGR to Rs.82.4 over CY2011-13E. At current levels, the stock is trading 28.1x and 25.9x CY2012E and CY2013E earnings, respectively. We remain Neutral on the stock.

Source : Equity Bulls

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