GSK Pharmaceuticals

Emkay Share & Stock Brokers is bullish on GlaxoSmithKline Pharmaceuticals and has recommended buy rating on the stock, in its July 27, 2010 research report.

“GSK Pharma’s net sales for 2QCY10 grew 9% YoY to Rs4.98b (v/s our estimate of Rs5.2b) while adjusted PAT grew 6% YoY to Rs1.4b (v/s our estimate of Rs1.46b). Supply constraints resulted in lower vaccine sales, which in turn impacted topline growth. The management has indicated that the supply of vaccines has begun improving towards the end of June 2010. Domestic pharmaceutical revenues grew 12% YoY while overall sales (including exports) grew 9% YoY.”

“The stock deserves premium valuations due to strong parentage (giving access to large product pipeline), brand-building ability and likely positioning in post patent era. Based on lower than estimated 2QCY10 results, we have downgraded our EPS estimates. We now estimate EPS at Rs68 (up 14.2%) for CY10 and Rs78.2 (up 15%) for CY11. The stock trades at 30.2x CY10E and 26.3x CY11E earnings. Maintain Buy.”