GSK Pharma hits 3-month high in weak market; surges 31% in 7 days

GSK Pharma share price: The company's consolidated net profit jumped multifold to Rs 230 crore as compared to Rs 46 crore a year ago in the December quarter

The stock of GlaxoSmithKline Pharmaceuticals (GSK Pharma) hit a three-month high of ₹2,640 a share as it surged 5 per cent on Monday before closing at ₹2,638.

 

During the past seven trading days, the pharma stock rallied 31 per cent after it demonstrated a strong growth and sustained profitability for the quarter ended December 2024 (Q3FY25).

 

The company's consolidated net profit jumped multifold to ₹230 crore compared to ₹46 crore a year ago.

 

Revenue for the quarter stood at ₹949.42 crore against ₹805.26 crore, clocking a rise of 17.9 per cent. 

 

The healthy performance was largely driven by robust volume growth in the general medicine segment and a continued scale-up in vaccine offtake.

 

 

Adjusting for a one-off item, earnings before interest, tax, depreciation and amortisation (Ebitda) margin expanded 270 basis points (bps) year-on-year (Y-o-Y) to 29.7 per cent. This is due to lower employee expenses, though this was offset by higher other expenses.

 

Abdulkader Puranwala and Nisha Shetty of ICICI Securities said, “GSK’s revenue growth of 18 per cent was an outlier in the quarter, compared to other listed acute-driven pharma companies that posted single-digit growth. The outperformance was driven by robust double-digit volume growth across general medicine (11 per cent), specialty (37 per cent) and vaccine portfolio (15 per cent).” 

 

The management said the quarter saw strong performance across key product portfolios.

 

Flagship brands within the general medicines portfolio, including Augmentin, Ceftum, and T-bact, strengthened their market positions with share gains. The company's innovative respiratory portfolio, led by Nucala and Trelegy, achieved robust growth, further expanding patient access across India. 

 

In the vaccines segment, GSK maintained its leadership in the self-pay private market for paediatric vaccines. The adult vaccines division continues to gain momentum with Shingrix as the company spearheads the expansion of adult immunisation in India.

 

GSK Pharma would be launching two products in the gynae cancer segment (endometrial cancer and ovarian cancer) in India in H1FY26. The company is implementing efforts to build an ecosystem for adult vaccination through educating healthcare practitioners. It is making efforts to sustain Ebidta margin, Motilal Oswal Financial Services said.

 

Volume growth in generic business would be sustained, going forward, due to strong brand equity, improved productivity of medical representatives, and launch of line extensions in big brands.

 

The vaccine segment reported 15 per cent Y-o-Y growth, driven by strong growth for Boostrix, Variritix, and Fluarix. 

 

In addition, GSK Pharma is intensifying efforts to increase adult immunisation through campaigns, awareness drives, and increasing touchpoints. This will propel Shingrix's growth, the brokerage firm said.

 

Post Q3 results, ICICI Securities had increased its earnings estimates by 5-6 per cent for FY25/FY26 to factor in better margins.

 

The brokerage had upgraded the stock to add from a hold rating earlier with a revised target price of ₹2,250, based on 38 times FY26 earnings. 

 

Motilal Oswal, however, has maintained its neutral stance.

 

Compared to a 9 per cent Ebidta growth over FY22-24, the brokerage expects Glaxo to deliver a 19 per cent Ebidta growth over FY25-27. This would be driven by niche launches, market share gain, and enhanced reach.

 

In addition to vaccines, Glaxo would also be introducing innovative drugs to treat endometrial and ovarian cancer.

 

However, the current valuation captures the earnings upside, say analysts led by Tushar Manudhane of the brokerage.