Sell GlaxoSmithKline Pharma; tgt of Rs 1880: PINC Research

“GlaxoSmithKline Pharma expects 40% of its sales to be impacted if the policy is implemented in its current form. Overall the company expects to grow in-line with the industry growth average going ahead.”

“The company refrained to provide any guidance with regards to the revenue growth or the OPM for CY12, owing to the pending clarity on the NPPP-2011 as well as uncertainty due to currency fluctuations. However, it expects to grow in-line with the industry average growth rate. The proposed NPPP-2011, which entails to bring more than 60% of the domestic drugs under price control on back of market based pricing, still remains unclear and would negatively impact GSK Pharma. We expect key brands such as Augmentin and Calpol to be impacted by the policy.”

“The stock is trading at an expensive valuation of 25.1x CY12E and 22.1x CY13E earnings. We maintain our ‘SELL’ recommendation on the stock on back of rich valuations and the overhang of the proposed NPPP-2011. We value the company at 22x one year forward earnings with a target price of Rs 1880,” says PINC Research report.

Non-Institutions holding more than 90% in Indian cos

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