GSK Pharma Q3 Results Review - Q3 Operationally In-Line; Vaccines Off-Take On Rise: Motilal Oswal

Motilal Oswal Report

GlaxoSmithKline Pharma Ltd. delivered operationally in-line Q3 FY24 performance. While YoY sales growth was lower than expected, GSK Pharma delivered better than-expected margins for the quarter. GSK Pharma continues to enhance marketing efforts toward innovative portfolio, comprising shingrix, nucala, and trelegy. It is also implementing efforts to better industry in its base portfolio.

We raise our earnings estimate by 6%/3%/2% for FY24/FY25/FY26, driven by

1. Outperforming industry trends in the general medicines category,

2. Increased traction in the innovative portfolio, and

3. Leveraging benefits from lower raw material costs.

We value GSK Pharma at 40 times 12 M forward earnings to arrive at a price target of Rs 2,200.

While The company faced headwinds on account of addition of products under National list of essential medicines, it continues to implement efforts to improve business prospects. Having said this, The company trades at 54 times FY25E earning per share of Rs 43 and 50 times FY26E EPS of Rs 47.

We believe that the current valuation adequately captures the upside in earnings. We reiterate our 'Neutral' stance on the stock.

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