Buy GSK Consumer; target Rs 2850: Firstcall Research

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Buy GSK Consumer; target Rs 2850: Firstcall Research

Firstcall Research is bullish on GlaxoSmithKline Consumer Healthcare Limited and has recommended buy rating on the stock with a target of Rs 2850 in its December 5, 2011 research report.

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Firstcall Research is bullish on GlaxoSmithKline Consumer Healthcare Limited and has recommended buy rating on the stock with a target of Rs 2850 in its December 5, 2011 research report.

"GlaxoSmithKline Consumer Healthcare Limited engages in the manufacture and sale of nutritional foods and over the counter drugs primarily in India. Company has 85 manufacturing sites in 37 countries, over 16000 R&D. During the quarter ended, the robust growth of Net Profit is increased by 31.16% Rs.1030.10 million. Net Sales and PAT of the company are expected to grow at a CAGR of 17% and 22% over 2009 to 2012E respectively. GSK Consumer Healthcare has a strong marketing and distribution network in India."

"GlaxoSmithkline Consumer Healthcare has posted a net profit of Rs 1,030.30 million for the quarter ended Sept. 30, 2011 as compared to Rs 785.70 million for the quarter ended Sept. 30, 2010, representing increase of 31.16%. Total income basis has increased from Rs 6330.00 million for the quarter ended Sept. 30, 2010 to Rs 7446.00 million for the quarter ended Sept. 30, 2011, representing an increase of 17.63%. Total Income for the quarter rose 18.85% to Rs 7677.10 million, when compared with the prior year period. The EPS of the company is stood at Rs.24.50 for the quarter ended Sep 2011."

"At the current market price of Rs. 2522.00, the stock is trading at 28.06 x CY11E and 24.47 x CY12E respectively. Earning per share (EPS) of the company for the earnings for CY11E and CY12E is seen at Rs.88.19 and Rs.101.15 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 17% and 22% over 2009 to 2012E respectively. On the basis of EV/EBITDA, the stock trades at 17.21 x for CY11E and 15.04 x for CY12E. Price to Book Value of the stock is expected to be at 7.82 x and 5.93 x respectively for CY11E and CY12E. We expect that the company will keep its growth story in the coming quarters also. We recommend 'BUY' in this particular scrip with a target price of Rs 2850 for Medium to Long term investment," says Firstcall Research report.

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To read the full report click on the attachment