GlaxoSmithKline Pharmaceuticals - 1QFY2017 Result Update - Neutral - Angel Broking

For 1QFY2017, sales stood at Rs. 685cr V/s Rs. 700cr expected and V/s Rs. 622cr in 1QFY2016, a yoy growth of 10.2%. The sales growth has been impacted on back of the pricing cuts implemented by the government. On the operating front, the OPM came in at 10.2% V/s 16.7% in 1QFY2016 and V/s 17.0% expected. The company's OPM was impacted by other expenses, which grew by 40.5% yoy. Thus, the company posted an Adj. net profit of Rs. 71cr V/s Rs. 95cr in 1QFY2016, a yoy de-growth of 25.2%. We maintain our Neutral rating.

Results below expectations: For 1QFY2017, sales stood at Rs. 685cr V/s Rs. 700cr expected and V/s Rs. 622cr in 1QFY2016, a yoy growth of 10.2%. The sales growth has been impacted on back of the pricing cuts implemented by the government. On the operating front, the OPM came in at 10.2% V/s 16.7% in 1QFY2016 and V/s 17.0% expected. The company's OPM was impacted by other expenses, which grew by 40.5% yoy. Thus, the company posted an Adj. net profit of Rs. 71cr V/s Rs. 95cr in 1QFY2016, a yoy de-growth of 25.2%..

Outlook and valuation: The company has a strong balance sheet with cash of ~Rs. 2,000cr, which could be used for future acquisitions or higher dividend pay outs. On the operational front, we expect the company's net sales to post a CAGR of 13.4% to Rs. 3,527cr and EPS to register a mere CAGR of 15.9% to Rs. 59.4 over FY2016-18E. We remain Neutral on the stock.

Shares of GLAXOSMITHKLINE PHARMACEUTICALS LTD. was last trading in BSE at Rs.3147.05 as compared to the previous close of Rs. 3109.9. The total number of shares traded during the day was 1155 in over 371 trades.

The stock hit an intraday high of Rs. 3160 and intraday low of 3100. The net turnover during the day was Rs. 3608114.

Source : Equity Bulls

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