GlaxoSmithKline Consumer Healthcare Ltd. share price target

7 February 2020 While profits were in line, sales were significantly affected by a sharp decline in exports and a poor performance in the foods business. According to management, the focus on top-line growth may keep near- term margins under check. Given the nature of the Hindustan Unilever and GSK Consumers (SKB) transaction, the stock price of the latter will track that of the former and not its own financial performance. Maintain YoY/+60bp QoQ) and at 11.5% for Boost (+70bp YoY/+10bp QoQ). Volume market share (L3M Dec19) stood at 51.5% and 15.4% for Horlicks and Boost, respectively. Commodity inflation stood at 6.5% for 3QFY20; inflation is likely to persist for a few more quarters. SKB would not take price increase in line with or ahead of inflation as it can lead to a decline in category penetration.

Efforts in place to reduce concentration risk GSK Consumer (GSKCH) derives more than 80% of its revenues from eastern, southern regions. States like Karnataka and West Bengal together constitute more than 22% of sales in the HFD category in these regions. However, the company is slowly increasing its presence in other regions and is working on a strategy wherein the focus has shifted to Chocolate Horlicks to drive growth in western and northern regions as consumers in these regions prefer brown malt drink to white malt drink. The company also...

Value market share (MAT Jun'19) for Horlicks stood at 44.3% (up 10bp YoY/ 140bp QoQ) while for Boost, it stood at 11.2% (flat YoY, up 50bp QoQ). Volume market share (MAT Jun'19) for Horlicks/Boost stood at 50.9%/14.9%. Gross margin expanded 40bp YoY to 70%, while EBITDA margin was up 270bp YoY to 23.5% (v/s est. of 20.3%). Concall highlights: (1) Volume growth for 1QFY20 was broad-based; domestic volume growth for both Horlicks/Boost stood at 4% v/s overall volume growth of 5.4%, which was supported by exports. (2) Pricing and deflation led to gross...

and lower other expenses (-200bp YoY/ -380bp QoQ), partly offset by increased employee cost (+190bp YoY to 19.5%). Consequently, EBITDA grew ~5% YoY to INR1.6b (our estimate: INR1.4b). Other income includes liabilities written back to the tune of INR231m. Adjusting for the same, PAT stood at INR1.2b (our estimate: INR961m)....

GSK Consumer's distribution network comprises of over 800 distributors and a direct coverage of over 8 lakh retail outlets. Further, the company added 190,000 outlets over last one year, taking its distribution reach to 1.96 million outlets. Moreover, GSK has presence across 24,000 villages through rural sub-distributors and village level entrepreneurs (VLE's) across 9 States. The company has also strengthened its VLE program ensuring its products are now available across 4.5 million outlets. With rural markets continue to outpace urban market growth and deliver double digit growth quarter on...

15 February 2019 volume growth was 9.6% YoY. EBITDA increased 14.9% YoY to INR2.4b (our category saw revenue growth of 7.5% YoY. stood at 43% (-110bp YoY, -30bp QoQ) while value market share for Boost stood at 10.8% (-50bp YoY, -10bp QoQ). Higher staff costs (+140bp YoY to 14%) and ad spends (+110bp YoY to 12.1%) were almost entirely offset by lower other expenses (-220bp YoY to 23.

ICICI Securities Ltd | Retail Equity Research Overall volume growth of 8.7% led to 7.5% increase in Q3FY19 sales to | 1,116.8 crore. HFD category volume growth was at 9.6% Auxiliary income increased 20% YoY on the back of improvement in OTC products and oral care portfolio performance. Volume market share of Horlicks was 49.5% with value market share of 43% (decline 30 bps QoQ). On the other hand, volume market share of Boost was 13.9% with value market share of 10.8% (decline of 10 bps QoQ)...

In March 2018, GlaxoSmithKline Plc had announced a strategic review of GSK Consumer Healthcare's (GSKCH) consumer nutrition business, including brands like Horlicks & Boost as the company was exploring a partial or full sale of its stake in GSKCH by end of 2018. This was triggered by GSK looking to help fund its $13 billion buyout of the Novartis stake in...

ICICI Securities Ltd | Retail Equity Research Strong volume growth of 13.7% led to 14.4% increase in Q2FY19 sales to | 1,272 crore. Export revenues swelled by 74% on account of addition of Malaysia in the export market. The domestic business grew 10.8% on account of domestic volume growth of 8.7% Auxiliary income increased 20% YoY on the back of an improvement in OTC products and oral care portfolio performance. Volume market share of Horlicks was 49.5% with value market share of 43.3%. On...

12.8b) led by domestic HFD volume growth of ~10% (est. Overall volume growth was 13.7% YoY. EBITDA grew 36.6% YoY to INR3.5b (est. INR3.1b), while Adj. PAT rose 38.1% YoY to INR2.

Revenue decreased by 6.14% to Rs. 1107.14 Cr in Q1FY19 when compared to the previous quarter GlaxoSmithkline Consumer Healthcare Ltd Q1FY19 results Comment

Auxiliary income increased 21% YoY on the back of an improvement in OTC products and oral care portfolio performance. Volume market share of Horlicks (including variants) was 50.4% with value market share of 44.2%. On the other hand, volume market share of Boost was 14.2% with value market share of 11.2% EBITDA increased 38% to | 230.2 crore (I-direct estimate: | 219.5 crore) while EBITDA margins surged 387 bps to 20.8% on the back of 433 bps increase in gross margin, partly offset by higher employee...

GSK Consumer (SKB) posted 12.3% YoY sales growth (including operating income) to INR11.1b (in-line). EBITDA grew 38% YoY to INR2.3b (our estimate: INR2.2b). Reported PAT rose 51.6% YoY to INR2b, led by a steep 75% YoY rise...

ICICI Securities Ltd | Retail Equity Research Net revenue for the quarter declined 2.5% YoY to | 1179.6 crore (Idirect estimate: | 1060.1 crore). However, on a comparable basis, net revenue increased 7% largely led by domestic volume growth of 8% Auxiliary income increased 3% YoY to | 58 crore. Volume market share of Horlicks was 51.3% with value market share of 44.3%. On...

As HFD category leader, GSK's efforts on consumer penetration through Low Unit Packs (LUPs) and innovations in premium end are working well, as reflected in category demand revival and market share gains. Pricing power, category leadership, & valuation are comforting.

Health food drinks (HFD) category is showing signs of a recovery, albeit on a low base. GlaxoSmith Kline Consumer Healthcare's (GSKC) market share, too, has been rebounding in recent months, the impact of which, however, is yet to be reflected in its financial results. There are now new insights (e.g. better understanding of what consumer wants) emerging in the HFD category and also for GSKC. While both the new products- Growth Plus and Protein Plus - are premium, there is willingness to trade-off profitability for overall growth. Unlike its earlier stance, price action is likely to be driven by commodity costs rather than setting a fixed number over inflation.

GlaxoSmithkline Consumer Healthcare Ltd Q3FY18 results comment Revenue fell by 7.23% to Rs. 1034.67 Cr in Q3FY18 when compared to the previous quarter. On the other hand, it increased by 20.26% when compared with Q3FY17.

GSK Consumer's (SKB) sales grew 20.3% YoY (including operating income) toINR10.3b. EBITDA rose 21.7% YoY to INR2b (est. of INR2b), while adj . PAT increased 20.0% YoY to INR1.6b (est. of INR1.5b). Domestic sales grew 20%, led by 17% volume growth. Domestic like-to-like sales (adjusted for GST accounting impact) grew 7% YoY (volume growth of 4%). Market share expanded 20bp QoQ to 44.1% in Horlicks, but shrunk by 20bpQoQ to 16.2% in Horlicks Extensions and by 10bp QoQ to 11.3% in Boost. Gross margin expanded 110bp YoY to 68.8%. However, staff costs increased by 50bp YoY to 12.9%, A&P to sales grew 20bp YoY to 10.9%, and other expenses were up 20bp YoY to 25.3%, restricting EBITDA margin expansion to20bp YoY (19.7% v/s est. of 20.5%). Other income increased 15% YoY, ahead of our expectation

Q2FY18 in line with expectations: Net sales, EBITDA and adj PAT grew 5%, 7% and 5% (vs. consensus expectation of 6%, 5% and 6%). Domestic sales grew 6% aided by 4% price hike. Export sales declined 26%.

GlaxoSmithkline Consumer Healthcare Ltd Q2FY18 results comment Revenue rose by 13.19% to Rs. 1115.32 Cr in Q2FY18 when compared to the previous quarter. Also, it increased by 3.24% when compared with Q2FY17.