GlaxoSmithKline Consumer Healthcare Ltd - Re-iterating ACCUMULATE - Destimoney Securities

- We are re-iterating ACCUMULATE rating on GlaxoSmithKline Consumer Healthcare Limited (GSKCH) with a revised target price of Rs.2,950 per share.

- During Q1CY12, GSKCH posted 15% YOY revenue growth. The growth was impacted negatively because of no sales orders from CSD for two months.

- In our previous update (Nov 17, 2011), we discussed the possible re-rating of the stock based on a noticeable success in non-MFD (malted food drinks) segment.

- GSKCH has discontinued Horlicks Nutribar and Lucozade. Meanwhile its recently launched Horlicks Oats has gathered momentum in south India with 12% market share.

- Biscuits business has recorded 31% YOY growth in Q1CY12. Part of it was contributed by reducing grammage per packet, which increased the yield by 11%.

- GSKCH is expanding its distribution in north and west India. The company aims to expand its reach to 70,000 outlets by CY12. We expect GSKCH's flagship products to find it difficult to penetrate in these regions.

- Raw material prices like SMP (Skimmed Milk Powder) and Barley remain at elevated levels. Judicious price hikes should enable GSKCH to maintain healthy margins.

Source : Equity Bulls

Keywords