GlaxoSmithKline Pharmaceuticals Ltd. share price target

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%.

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...

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...

24 May 2018 4QFY18 sales declined ~2% YoY (+6% QoQ) to INR7.5b (est. Other income came in lower at INR183m v/s INR351m in 4QFY17. EBITDA rose significantly by ~33% YoY to INR1.5b, primarily due to a lower base (4QFY17 was impacted by regulatory issues). EBITDA margin stood at 20.7% (+540bp YoY). Adj. PAT rose ~21% YoY to INR1.1b, led by operational leverage. Although revenues declined marginally, adjusting for GST impact and prior-year disposals, revenue growth was in double-digits with strong volume growth. Margin improvement of 540bp YoY is primarily due to a lower base, which was impacted by regulatory issues and price erosion.