GSK Pharma open offer begins today; stock hits 52-week high

MUMBAI: GSK Pharma continued to attract investor attention after its UK-based parent company GlaxoSmithKline’s voluntary open offer started today.

The global healthcare major plans to invest Rs 6,390 crore to raise its stake in its Indian subsidiary to 75 percent from the existing 50.67 per cent.

GlaxoSmithKline plans to acquire up to 2.06 crore shares of GSK Pharma at Rs 3,100 per share.

Shares of GSK Pharma surged 20 per cent on the day the voluntary open offer was announced on December 16, 2013. It has been been on an upmove since then and hit fresh high in trade today.

“We believe post closure of the open offer the stock might trade at around Rs 2,800, which would be a base price for the stock – based on 36x of CY14E earnings,” said Nirmal Bang report.

“We expect 80 per cent of the shares will be accepted in open offer and balance shares,” the report added.

According to Sarabjit Kour Nangra, VP-Research, Pharma, Angel Broking, on valuation front, on a normalized basis, the stock at the buyback price would trade at around 34xCY2014 earnings..

“The long term shareholders are advised to remain put in the stock, as in the long run when these facilities become operational (from 2017), the current shareholders can easy make a 20 per cent p.a on the stock. However, the shareholders, looking from a very near term perspective should renter the shares, as the valuation sin near term, at the buy- back price is very attractive,” Nangra said.

At 10:00 a.m. the stock was at Rs 3,016.55, up 0.11 per cent, on the BSE. It touched 52-week high of Rs 3,020 and a low of Rs 3,014.40 in trade today.518.cms