GSK Pharma Q2 Results Review - General Medicines, Specialty, The Key Drivers For Sales Growth: Motilal Oswal

Motilal Oswal Report

GlaxoSmithKline Pharmaceuticals Ltd. delivered an inline performance in Q2 FY23. The healthy progress in general medicines and specialty business segments was offset by reduced traction in the vaccines business.

The company’s revenue declined 2% YoY to Rs 9.2 billion (versus estimate of Rs 9.1 billion) in Q2 FY23.

Gross margin expanded 180 bp YoY to 60.2% led by product mix. Ebitda margin improved marginally by 40 bp YoY to 28% due to lower employee cost (down 160 bps YoY as a % of sales) offset by higher other expenses (up 300 bps YoY as a % of sales).

Ebitda was flat YoY to Rs 2.6 billion (versus estimate of Rs 2.5 billion) during the quarter.

We expect an 8% earnings compound annual growth rate over FY22-24 fueled by 5% sales CAGR and 130 bps margin expansion.

GSK Pharma’s focus on core brands has yielded better-than-industry growth in its focus market of certain therapies.

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