GlaxoSmithKline Consumer Healthcare shares fell 2 percent in morning on Monday after global research firm Credit Suisse downgraded the stock to neutral from outperform despite strong earnings growth in December quarter.
The brokerage also slashed its price target by 7.4 percent to Rs 8,330 from Rs 9,000 apiece earlier as healthy volume growth and margin tailwinds may be behind.
GSK Consumer’s profit in quarter ended December 2018 grew by 35 percent to Rs 221 crore and revenue increased by 7.42 percent to Rs 1,116 crore compared to a year-ago.
At operating level, EBITDA (earnings before interest, tax, depreciation and amortisation) jumped 15 percent to Rs 238.53 crore and margin expanded by 140 bps to 21.38 percent YoY.
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Meanwhile, in December 2018, the company had announced divestment of Horlicks and other consumer healthcare nutrition brands to Unilever plc and the merger of GSK Consumer Healthcare with Hindustan Unilever Limited (HUL).
On January 23 this year, the merger deal with Hindustan Unilever Limited (HUL) was approved by the Competition Commission of India (CCI).
“The merger is now subject to the receipt of other necessary statutory and regulatory approvals under applicable laws. The merger process is moving along expected timelines,” the company added.
GSK’s merger with HUL is expected to be completed before December 2019 and the stock is now a proxy for HUL, Credit Suisse said.
At 10:01 hours IST, the stock was quoting at Rs 7,276.80, down Rs 151.35, or 2.04 percent on the BSE.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
First Published on Feb 18, 2019 10:20 am