>GLAXO SMITHKLINE PHARMA (KARVY)

We believe net revenues for the quarter will move up by 11.4 % to Rs 4660 mn. Part of the growth can be attributed to lower excise duty for this quarter. The revenue growth will mainly be driven by priority products which will be growing by double digits. Operating margins are expected to be flat at 36.2 %.while profits for the quarter are expected to be higher by 8% to Rs 1322 mn.

The company launched three products in CY 2008 which include Tykerb, Rotavirus and Olmesartan. In CY 09, the company plans to launch Mycamine, Eltrombopag (anti platlet), Synflorix a Strepto Pneumonia vaccine and Rezonic. The company has multiple engines of growth like Branded generics, Vaccines, Rural marketing and In-licensing. We believe these new initiatives should fructify from CY 2011 and company should clock higher growth in revenues. We marginally upgraded our CY 09E EPS by 0.6 % to Rs 61.9and introduce our CY 10E estimates at Rs 69.4. At the current price of Rs 1085 excluding cash of Rs 207, the stock is quoting at 14.2x CY 09E. We value the base business at 15x CY 10E and add Rs 240 cash per share. We value GSK Pharma at Rs 1280 and upgrade the stock to Outperformer.

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