Outlook & Valuation: We downgrade our revenue estimates for FY21E / FY22E by 4.6% / 4.6% to Rs. 32.9 Bn / Rs. 36.3 Bn for FY21E / FY22E. We downgrade our EBITDA margins for FY21E / FY22E by 50 bps to 20.6%/21.9% due to fixed nature of personal cost.

29 July 2020 GSK Pharma (GLXO)s performance for the quarter was deeply impacted by the COVID-19-led disruption. As a result, the company posted the lowest revenue recorded in the past 16 quarters. The severity amplified with reduced operating leverage. The outlook is expected to gradually improve with the easing of the lockdown. We reduce our EPS estimate by 26.3%/11.7% for FY21/FY22 to factor COVID- 19-led weakness in the Prescription and Vaccination segments. We continue to value GLXO at 37x 12M forward earnings (25% discount to its three-year average) to arrive at TP of INR1,355. GSK Pharma revenues were down 17.7% to INR6.5b (v/s est. GM expanded 230bp YoY to 60.

GlaxoSmithKline Pharmaceuticals Ltd: Outlook & Valuation: We downgrade our revenue estimates for FY21E by 4.3% to Rs 34.5 bn and introduce our revenues for FY22E.

4 February 2020 GSK Pharma (GLXO) was able to improve profitability over FY17-9MFY20, led by product rationalization/enhanced focus on high-margin products. However, its decision to stop selling Zinetac brand (~6% of sales) should have an adverse impact on near-term growth. We expect 8-9% sales CAGR over the next 2 years after adjusting for the loss of Zinetac sales. We reduce our EPS estimates by 12.8%/1.7%/1.3% and reduce P/E multiple to 41x (from 43x earlier) to factor in the (a) voluntary stoppage of Zinetac, and (b) gradual industry-wide slowdown in the anti-infective category with improved hygienic conditions/lower intensity of epidemics. Revenue declined 6% YoY to INR7.8b (v/s est. Adj. for the voluntary recall of ranitidine products and portfolio-optimization initiative, revenue was up 6% YoY. Gross margin (GM) expanded 430bp YoY (+20bp QoQ) to 57.9%, led by the change in product mix.

Revenue growth lower than estimates: Revenues for the quarter at Rs 8821 mn were below our estimates of Rs 9469mn on account of lower traction.

22 October 2019 2QFY20 sales increased 8% YoY to INR8.8b (v/s est. Gross margin (GM) stood at 58.1% and improved 80bp YoY (stable QoQ) due to portfolio rationalization. EBITDA margin improved ~175bp YoY to 22% on account of the superior product mix and lower other expenses as % of sales (-60bp YoY to 18.2%). Employee cost was also down, 40bp YoY, supporting margin expansion. As a result, EBITDA increased ~17.5% YoY to INR1.9b (v/s est. Adj PAT came in at INR1.

steady operating performance with revenue growing by ~8% (driven by 5.4% volume growth). Strong expansion in EBIDTA margins and higher other income led to strong bottom-line growth. Horlicks continued to maintain its leadership in the Health Food Drinks (HFD) category with 44% market share. Premium products gaining good traction coupled with new product launches and improving penetration will be key revenue drivers going ahead. The integration of GSK Consumer and Hindustan Unilever (HUL) will take place by...

Revenues for the quarter at Rs 7880 mn were below our estimates of Rs 8195 mn. The operating margins at 21% in Q1FY20 were below our estimates of 23.2% on account of lower revenue traction and lower gross margin.

Volume growth sustains; Low input cost and efficiencies led to margin expansion: GSK Consumer reported strong results in Q4FY2019, with broad-based growth across products and channels. Revenue grew by 9%, driven by 6.3% volume growth. Business auxiliary income rose by 20% y-o-y, led by double-digit growth across all products. Unlike other FMCG companies, GSK...

GSK has given an optimistic growth outlook on the back of 1) double digit Change in Estimates | Target | Reco HFD volume growth in 9MFY19 2) uptick in rural demand post consumption friendly budget 3) success of Horlicks Protein Plus in fast growth protein...

4 February 2019 Sales grew at robust rate of ~17% YoY to INR8.3b as against our est. of INR7.7b, led by better traction in dermatology and hormones category. Gross margin (GM) declined sharply by ~650bp YoY and ~360bp QoQ to 53.6% due to change in product mix. EBITDA margin contracted by ~350bp YoY to 16.6%, primarily due to decline in GM. This was off-set to some extent by lower employee expense/other expenses, which were down ~240bp/~60bp (as % of sales) YoY. EBITDA declined ~3% YoY to INR1.4b as against our est. Despite margin contraction, PAT increased ~26% YoY to INR1.1b due to better revenue growth, one-time income of INR230m from property sale, and INR50m from non-core brand divestments.

We maintain Sell rating on GlaxoSmithKline Pharma (GSK) and revise our TP to Rs950 (earlier Rs1,900 cum bonus) based on 24x March'20E EPS of Rs39.6. GSK's Q2FY18 results were better than our estimates. GSK's revenue declined by 2%YoY, EBIDTA margin dropped 280bps to 20.2% and net profit before EO item declined by 10% YoY on a higher base in Q2FY18 after GST implementation. GSK's major brands grew by high single digit to double digit during the quarter. That said, the company has a strong presence in the vaccines segment and derives ~20% revenues from the same. Key risks to our assumptions include...

Revenue growth impacted by GST: Revenues for the quarter at Rs 8163 mn were below our estimates of Rs 8613 mn. The operating margins at 20.2% in Q2FY19 were below our estimates of 24%.

22 October 2018 GSK Pharmas (GLXO) sales declined marginally by ~2% YoY to INR8.2b (our 2QFY18 post GST implementation). Gross margin improved ~230bp YoY (+30bp QoQ) to 57.2%. This is reflective of managements strategy to rationalize its portfolio with an enhanced focus on higher-margin products. EBITDA margin, however, shrank ~270bp YoY to 20.2%, primarily due to higher other expenses (+400bp as % of sales). EBITDA declined ~14% YoY to EBITDA margin contraction and one-time non-operational expense of INR118m on account of restructuring. Adjusted for non-operational 1HFY19, sales stood at INR15.5b (+8% YoY), EBITDA at INR3.1b (+44% YoY) and PAT at INR2.1b (+51% YoY). GLXOs secondary sales grew by a muted ~1% in the quarter, as against 9.6% growth in the Indian Pharmaceutical Market (IPM). According to AIOCD, FDC-related market grew by 2% YoY.

Revenue decreased by 1.73% to Rs. 735.65 Cr in Q1FY19 when compared to the previous quarter. Glaxosmithkline Pharmaceuticals Ltd Q1FY19 results Comment

Revenue growth on account of low base due to GST: Revenues for the quarter at Rs 7357 mn were above our estimates of Rs 6675mn on account of low base due to GST last year. The operatingmargins at 19.1% in Q1FY19 were in line with our estimates of 19%.

Glaxo's Q1FY19 results were in-line on all fronts with Sales/EBITDA/R.PAT marginally lower than our estimates by 3.1%/2.6%/4.9%, respectively. Sales grew by 21.2% YoY to Rs7.4bn(est. of Rs7.5bn) driven by higher volumes. EBITDA margins were at 19.1% (est. of 19%) down QoQ from 20.7% given lower gross margins and increased OE. APAT was...

24 July 2018 sales grew strongly by ~21% YoY (-2% QoQ) to INR7.4b (est. of INR7b), primarily due to a low base (1QFY18). EBITDA came in at INR1.4b (est. of INR951m), with the margin at 19.1% (YoY EBITDA is not comparable, as sales decline and higher other and employee expenses had resulted in EBITDA loss in 1QFY18). of INR790m) includes one-time expense of INR83m. Adjusting for this, PAT stood at INR969m. secondary sales grew 7.4% YoY in 1QFY19, as against 9.1% growth in the Indian Pharmaceutical Market (IPM). According to AIOCD, FDC-related market grew 17% YoY. GLXOs key products Augmentin, Calpol, and Zinetac (up ~25% YoY) saw healthy growth in 1QFY19.

Revenues impacted by GST and sale of brands: Revenues for the quarter at Rs 7486 mn were below our estimates of Rs8245mn. The operating margins at 20.7% in Q4FY18 were below our estimates of 22.9 %, however increased by 324bps y-o-y.

Total revenues for Q4FY18 were at Rs7.5bn (est. Rs8.5bn) were down 4.5% YoY and up 6.4% on a QoQ basis with a double digit growth in the pharma portfolio (ex GST and divestments/ discontinued portfolio). EBITDA margins improved to 20.7% given improved product mix and curtailment in OE. PAT was in-line with estimates up...