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Karvy Stock Broking
GSK Pharma (Sell)
CMP: ₹3,451
Target: ₹2,742
We recently met up with the GlaxoSmithKline Pharma management to know about business, tepid results in the last quarter and business outlook. The key takeaways are mentioned below.
The company expects to launch two vaccines, two respiratories, couple of derma products and one anti diabetic product in the next two years. The company has reduced the price of a respiratory product (Seretide) to Cipla’s level. This would give the company incremental revenues.
Capex for FY15E–FY17E is ₹900 crore. GSK Pharma has acquired land at Bangalore (₹45 crore). Post the capex, the company will manufacture 60 per cent in-house and 40 per cent will be outsourced. The capacity will add 400 crore of solid dosages.
We have rolled over our estimates to March from December in line with the company. We have increased our revenue for FY15E to factor 15 month period. There has been a downgrade in EBITDAM by 130 bps/290 bps/160 bps for FY15E/FY16E/FY17E vis-à-vis CY14/CY15E/CY16E respectively on account of higher personnel and overheads cost.
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