Reduce GSK Pharma, target Rs 2483: Nomura

Nomura maintains a reduce rating on GSK Pharma and has also slashed its 12-month target price to Rs 2,483 from Rs 2,952 earlier. The pharma major trades at 70.1x one-year forward PE and 10x current EV/sales. The valuations appear rich.

However, the market expects strong revival in EBITDA margins and the stock is factoring in possible delisting if parent Glaxo Plc buys back remaining shares.

The global investment bank sees near-term headwinds from 35 per cent reduction in ceiling prices of largest selling drug, Augmentin. Nomura expect EBITDA margins to decline by 23 bps in FY17F.