GSK Consumer (SELL, 16% downside) - Ambit

GSK Consumer will report its results later today. We expect volume growth of only ~7% YoY in the Horlicks business, as discretionary spends are likely to be affected by a poor macro environment. However, strong sales growth in Sensodyne (of ~26% YoY) would likely lead to overall revenue growth (including auxiliary income) of 15% YoY. We expect EBITDA margins to expand by 50bps YoY supported by minor benefits from gross margins and other expenditure. PAT growth is likely to be adversely impacted by higher depreciation (due to the commissioning of its new plant) and slightly higher tax rates. The stock currently trades at 38.7x CY13 and 32.3x CY14 earnings. Our estimates remain ahead of consensus estimates by 1% on revenues and below consensus by 4% on PAT.

Source : Equity Bulls

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