Cut target on GSK Pharma, see gradual recovery: Credit Suisse

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26 Aug, 2025 12:21

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With maintaining neutral rating on Glaxosmithkline Pharmaceutical, Credit Suisse slashed target price to Rs 2,850 as it continues to struggle with price control & supply constraints in some products. It also reduced FY17 earnings per share by 41 percent.

The brokerage house expects a gradual recovery in end FY17/FY18.

The focus on high growth segments and capacity expansion in India augur well for longer term growth but the pace of near-term recovery remains uncertain and a key monitorable, it feels.

Glaxo's EBITDA margin has declined from 30 percent levels to the mid-teens over the last 2-3 years – hit by inclusion of some large products in the price control net and supply constraints in vaccines.

According to Credit Suisse, supply constraints are likely to ease by end FY17 and negative pricing on NLEM products is unlikely to continue in FY18. Longer term, capacity expansion in India should lower sourcing cost and improve margins, it feels.Posted by Sunil Shankar Matkar