I-Sec upgrades GlaxoSmithKline Pharma to Add, lowers target price to Rs 2,250

ICICI Securities has upgraded GlaxoSmithKline Pharmaceuticals to Add (from Hold earlier)with a revised target price of Rs 2250 (Rs 2550 earlier). The current market price of GlaxoSmithKline Pharmaceuticals is Rs 2367.9. GlaxoSmithKline Pharma, incorporated in 1924, is a Large Cap company with a market cap of Rs 40790.43 crore, operating in the pharmaceuticals sector.

GlaxoSmithKline Pharmaceuticals' key products/revenue segments include Pharmaceuticals, Service Income and Other Operating Revenue for the year ending 31-Mar-2024.



Financials
For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 984.49 crore, down -5.82% from last quarter Total Income of Rs 1045.31 crore and up 18.13% from last year same quarter Total Income of Rs 833.37 crore. The company has reported net profit after tax of Rs 229.88 crore in the latest quarter.

The company?s top management includes Ms.R S Karnad, Mr.B Akshikar, Mr.J Chandy, Mr.S Williams, Mr.M Anand, Dr.(Ms.)S Maheshwari, Mr.A N Roy, Mr.D Sundaram, Mr.P V Bhide. Company has Deloitte Haskins & Sells LLP as its auditors. As on 31-12-2024, the company has a total of 17 crore shares outstanding.

Investment Rationale
While GlaxoSmithKline Pharma growth opportunity is quite high, ICICI Securities believes the uptick in patented brands may be gradual. Besides, pharma MNCs in India usually import their patented brands, which limits their margins on such brands and the company would also have to spend on brand promotion. The brokerage expects GSK to witness an earnings CAGR of 15.3% over FY24?27E driven by a revenue CAGR of 9.1%. Asset-light and cash rich balance sheet may help in improving RoE and RoCE, which we expect to touch 43.9% and 46.9%, respectively, in FY26E. I-Sec increases their EPS estimates by ~5-6% for FY25/FY26 to factor in better margins. The stock currently trades at attractive valuations of 34.2x FY26E earnings and 25.2x EV/EBITDA. The brokerage has upgraded GlaxoSmithKline Pharma to ADD (earlier Hold) with a revised target price of Rs 2,250 (earlier Rs 2,550), based on 38x FY26E earnings (45x FY26E earnings). The key downside risks are: More products under price control; and delay in launching new products.

Promoter/FII Holdings
Promoters held $Parser.toNumber($MarketsData-marketResults.newShareHolding.summary.promoters.percentage) per cent stake in the company as of 31-Dec-2024, while FIIs owned 4.5 per cent, DIIs 7.28 per cent.