MOSL: GSK PHARMA (Neutral)-Strong revenue growth improves operating leverage
GSK Pharma: Strong revenue growth improves operating leverage
(GLXO IN, Mkt Cap USD3.9b, CMP INR3151, TP INR 2888, 8% Downside, Neutral)
- Low base and improved margins drive earnings growth: GLXO’s 1QFY19 sales grew strongly by ~21% YoY (-2% QoQ) to INR7.4b (est. of INR7b), primarily due to a low base (1QFY18). EBITDA came in at INR1.4b (est. of INR951m), with the margin at 19.1% (YoY EBITDA is not comparable, as sales decline and higher other and employee expenses had resulted in EBITDA loss in 1QFY18). Reported PAT of INR886m (est. of INR790m) includes one-time expense of INR83m. Adjusting for this, PAT stood at INR969m.
- Brands in Derma and Gastro-intestinal led growth for the quarter: GLXO’s secondary sales grew 7.4% YoY in 1QFY19, as against 9.1% growth in the Indian Pharmaceutical Market (IPM). According to AIOCD, FDC-related market grew 17% YoY. GLXO’s key products Augmentin, Calpol, and Zinetac (up ~25% YoY) saw healthy growth in 1QFY19. Of the top three therapies of GLXO (contribute ~60% of total sales), Derma registered highest growth of 10.1%. Its largest portfolio Anti-infectives reported modest growth of 6.2%.
- GLXO on track for commissioning Vemgal facility: GLXO’s manufacturing plant at Vemgal is nearing completion (to be commissioned by mid-CY18E), post which we expect revenues to pick up. GLXO plans to diversify its product portfolio (currently >90% of revenue comes from acute business).
GlaxoSmithKline Pharmaceuticals Limited is a pharmaceutical company. The Company and its subsidiary are engaged in the business of manufacturing, distributing and trading in pharmaceuticals. The Company develops a range of products in approximately three areas, including pharmaceuticals, vaccines and consumer healthcare. The Company's product portfolio includes prescription medicines and vaccines. The Company's prescription medicines range across therapeutic areas, and it also offers a range of vaccines for prevention of life-threatening diseases, such as pneumococcal disease, meningitis, hepatitis, rotavirus, whooping cough, small pox and influenza. It provides healthcare solutions to patients, with a range of prescription medicines across areas covering anti-infectives, dermatology, gynecology, diabetes, oncology, cardiovascular disease and respiratory diseases. The Company's manufacturing unit is located at Nashik, and its clinical development center is located in Bangalore.
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