Motilal Oswal's research report on GSK Pharma
Glaxo Pharma (GLXO) delivered better-than-expected 3QFY23 earnings led by better operating leverage. While sales at INR8b came in lower than estimated (INR8.3b), it was more than offset by better EBITDA margin at 28.5% (against estimated: 25.2%). While the general medicines category bolstered the company’s performance, vaccines continue to offset it to some extent. We raise our earnings for FY23E/FY24E/FY25E by 6%/3.5%/3%, respectively, to factor in: a) cost optimization, b) revision in prices of brands under National list of essential medicines (NLEM), and c) prolonged period for the pick-up in vaccines business.
Outlook
Considering moderate sales growth outlook over FY23-25, we lower our P/E multiple to 33x (v/s 35x) 12M forward earnings to arrive at our TP of INR1,340. As current valuations (of 33x/30.5x/28.3x FY23E/FY24E/FY25E earnings) factor in earnings and provide limited upside, we retain our Neutral rating.
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