Neutral GSK Pharma; target of Rs 2620: Motilal Oswal

Motilal Oswal recommended Neutral rating on GSK Pharma with a target price of Rs 2620 in its research report dated August 05, 2024.

Broker Research

August 06, 2024 / 12:52 IST

Neutral

Motilal Oswal's research report on GSK Pharma

Glaxo Pharma (GLXO) delivered better-than-expected 1QFY25 performance. The robust growth in key brands, young potential brands, and vaccines aided by lower raw material costs led to higher-than-expected margins. We raise our estimates by 3%/2% for FY25/FY26 to factor in: a) the sustained benefits of lower RM costs, b) improved scale-up in brands like Nucala, and Treligy, and c) strong volume off-take of Ceftum. We value GLXO at 47x 12M forward earnings to arrive at our TP of INR2,620. Despite an increase in the share of portfolio under NLEM, GLXO has shown healthy growth in respiratory brands, legacy brands (Augmentin, T-Bact, Calpol), as well as the vaccines segment. Accordingly, we model a 9% earnings CAGR over FY24-26. However, we believe that the current valuation adequately factors in the upside in the earnings. Reiterate Neutral.

Outlook

We raise our estimates by 3%/2% for FY25/FY26 to factor in: a) the sustained benefits of lower RM costs, b) improved scale-up in brands like Nucala, and Treligy, and c) strong volume off-take of Ceftum. We value GLXO at 47x 12M forward earnings to arrive at our TP of INR2,620.

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