Angel Broking neutral on GlaxoSmithKline Pharma

Angel Broking has maintained a neutral rating on GlaxoSmithKline Pharma in its February 20, 2013 research report. The research firm expects company's net sales to post a 13.0% CAGR to Rs 3,319cr and EPS to register a 4.1% CAGR to Rs 86.7 over CY2012–14.

"Glaxo reported its 4QCY2012 results, just-in-line with estimates on the top-line and OPM fronts, which came in at Rs 657cr and 27.2% respectively. The net profit came in at Rs 159cr, higher than an expected Rs 132cr, registering a growth of 7.6% yoy.

Just in-line results on sales and OPM front: For 4QCY2012, Glaxo reported a 16.1% yoy growth in its net sales to Rs 657cr, more or less in line with our estimate of Rs 680cr. The company's gross margin came in at 57.3%, ie in line with our estimate of 57.4%. This aided the OPM to come in at 27.2% (in line with our estimate of 26.8%) for 4QCY2012. During the quarter, Glaxo reported a growth of 7.6% yoy in its adjusted net profit to Rs 159cr, higher than our expectation of Rs 132cr.

Outlook and valuation: We expect Glaxo's net sales to post a 13.0% CAGR to Rs 3,319cr and EPS to register a 4.1% CAGR to Rs 86.7 over CY2012–14. At current levels, the stock is trading 27.2x and 24.5x CY2013E and CY2014E earnings, respectively. We remain Neutral on the stock," says Angel Broking research report.

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