GlaxoSmithKline Pharma - 1QCY2013 Result Update - Angel Broking

GlaxoSmithKline Pharma (Glaxo) reported its 1QCY2013 results, below estimates on the top-line, bottom line and OPM front. Overall, the company posted net sales and adjusted net profit of Rs. 632cr and Rs. 170cr, respectively, registering a yoy growth of 1.5% and a dip of 8.9% respectively. We continue to maintain our Neutral view on the stock.

Below expectations results: For 1QCY2013, Glaxo reported a 1.5% yoy growth in its net sales to Rs. 632cr, lower than our estimate of Rs. 734cr.The company's gross margin came in at 56.8%, lower than our estimate of 57.8%, this along with the lower than expected sales lead the OPM to come in at 24.2%, which was lower than our estimate of 30.4% and 31.4% for 1QCY2012. During the quarter, Glaxo reported a dip of 8.9% yoy in its adjusted net profit to Rs. 170cr, lower than our expectation of Rs. 234cr.

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. We expect Glaxo's net sales to post a 10.0% CAGR to Rs. 3,145cr and EPS to register a 4.8% CAGR to Rs. 83.3 over CY2012-14E. At current levels, the stock is trading 31.0x and 28.5x CY2013E and CY2014E earnings, respectively. We remain Neutral on the stock.

Source : Equity Bulls

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