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Centrum Broking
GSK Pharma (Sell)
CMP: ₹2,418.75
Target: ₹1,560
GlaxoSmithKline (GSK) started its journey in India in 1924 to become one of the leaders in the pharmaceutical industry with a rich healthcare heritage.
We maintain our ‘Sell’ rating on GlaxoSmithKline Pharma (GSK) and revise our TP to ₹1,560 (earlier ₹1,340) based on 24x March 1019E EPS of ₹64.9. GSK’s Q4FY17 results were better than our and consensus estimates as revenue grew 11 per cent, EBIDTA margin contracted 90bps to 17.4 per cent and net profit declined 4 per cent y-o-y. That said, GSK has a strong presence in the vaccines segment and is likely to derive growth from the same.
Key risks to our assumptions include faster-than-expected growth in the domestic market and higher growth of its flagship brands. We recommend a switch to other pharma companies, Abbott India or Sanofi India, due to GSK’s rich valuations.
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