Sell GSK Consumer; target of Rs 4380: Motilal Oswal

Motilal Oswal's research report on GSK Consumer

Net sales (including operating income) grew 2.3% YoY (our estimate: 1.3% YoY decline) to INR 11b. EBITDA grew 1.5% YoY (our estimate: 3.5% decline) to INR 2.17b, while adjusted PAT grew 8.4% YoY (our estimate: 1.8% decline) to INR 1.76b. MFD volumes declined 1% YoY (our estimate: 5% decline).

Outlook

EPS CAGR over FY17-19 is likely to be muted at 9%. We do not think the core business deserves to trade at over 26x. Since outlook might worsen if market share declines persist, we downgrade the stock to SELL. Our target price of INR 4,380 (26x FY19E core EPS + cash) implies 17% downside.