Buy GSK Consumer; target of Rs 8340: ICICI Direct

ICICI Direct's research report on GSK Consumer

Net revenue for the quarter grew by 9.3% YoY to Rs 1,286.1 crore on the back of 6.5% volume growth. Benefitted by low input costs, especially milk prices, EBITDA margins increased by 357 bps to 24.8% primarily driven by 164 bps increase in gross margins and 357 bps decline in other overheads to sales, partly offset by 115 bps increase in employee expenses & 49 bps increase in marketing expenses to sales during the quarter. With higher operating profit and other income, PAT for the quarter increased by 35% YoY to Rs 285.8 crore. The company declared dividend of Rs 105/share. crore.

Outlook

Margins should be well supported by judicious price increases, mix accretive innovation and significant cost-reduction initiatives. We reiterate our BUY recommendation on the stock with a target price of Rs 8,340/share.