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Expect growth to accelerate in 4QCY11 on very low growth recorded in the
previous quarter
We note that the December quarter is seasonally the weakest quarter for the company.
We pencil in 11.5% y-y growth in net sales for Glaxo in 4QCY11. This follows a very
weak 4.4% growth y-y recorded in 3QCY11, the lowest in the past 14 quarters. A
moderate pick-up in anti-infective sales and other acute therapies would aid growth, in
our view. It appears that the anti-infective segment had a late take-off this year. This may
have caused the depression of growth in previous quarter, and thus could be expected to
accelerate growth in current quarter. As per AIOCD AWACS data, in the months of
October and November 2011 the company recorded growth of 11.9% and 22.8%,
respectively.
We build in a 119bps decline in EBITDA margins y-y
The EBITDA margin has been under pressure through the year. For the nine months
ended September 2011, EBITDA margins were down 393bps y-y. We project a 90bps
decline in EBITDA margins y-y and a 70bps improvement q-q following significant drop in
3QCY11. We expect rising volumes to help boost margins sequentially. However, we
note that historically 4Q margins have been lower than 3Q.
We have not projected the actuarial gains explicitly. Given the rise in yields, we expect
some gains to be booked on that count.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Expect growth to accelerate in 4QCY11 on very low growth recorded in the
previous quarter
We note that the December quarter is seasonally the weakest quarter for the company.
We pencil in 11.5% y-y growth in net sales for Glaxo in 4QCY11. This follows a very
weak 4.4% growth y-y recorded in 3QCY11, the lowest in the past 14 quarters. A
moderate pick-up in anti-infective sales and other acute therapies would aid growth, in
our view. It appears that the anti-infective segment had a late take-off this year. This may
have caused the depression of growth in previous quarter, and thus could be expected to
accelerate growth in current quarter. As per AIOCD AWACS data, in the months of
October and November 2011 the company recorded growth of 11.9% and 22.8%,
respectively.
We build in a 119bps decline in EBITDA margins y-y
The EBITDA margin has been under pressure through the year. For the nine months
ended September 2011, EBITDA margins were down 393bps y-y. We project a 90bps
decline in EBITDA margins y-y and a 70bps improvement q-q following significant drop in
3QCY11. We expect rising volumes to help boost margins sequentially. However, we
note that historically 4Q margins have been lower than 3Q.
We have not projected the actuarial gains explicitly. Given the rise in yields, we expect
some gains to be booked on that count.
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