Buy GlaxoSmithkline Pharmaceuticals Ltd - Motilal Oswal

GSK PHARMA 4QCY10: EBITDA marginally lower than est; Improving growth traction; Buy

GSK Pharma's 4QCY10 net sales grew 10.4% YoY to Rs4.91b (v/s est Rs4.93b) while Adj PAT grew 14.5% YoY to Rs1.22b (v/s est Rs1.25b).

Topline growth was led by the vaccine and dermatology portfolios as well as gradual ramp-up in sales of new launches.

EBITDA grew by 6.5% YoY to Rs1.47b while EBITDA margins declined 110bp YoY to 30% vs est of 31.6%.

Adj PAT grew 14.5% YoY to Rs1.22b (v/s est of Rs1.25b). Adj PAT was in-line with estimates despite slightly lower operational performance.

The company has announced a dividend of Rs40/sh. We will be reviewing our estimates post the analyst meet. Based on our current estimates, we expect GSK to record CY11E EPS of Rs80.3 (up 17%) and CY12E EPS of Rs93.8 (up 16.8%). The stock is currently valued at 27.3x CY11E and 23.3x CY12E earnings. Maintain Buy with a target price of Rs2,410 (30x CY11E).

Source : Equity Bulls

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