GSK Pharma surges 7%, nears record high on healthy business outlook

Since November, the stock has appreciated by 36% after the company reported earnings improvement in Q2FY24 on strong demand for its vaccines and general medicine.

Shares of GlaxoSmithKline Pharmaceuticals (GSK Pharma) hit a multi-year high of Rs 1,928.70, as they rallied 7 per cent on the BSE in Thursday’s intra-day trade on healthy business outlook.

The stock of pharmaceutical company was trading higher for the fifth straight day, surging 14 per cent during the period. It was quoting close to its record high of Rs 1,936 touched on March 31, 2016.

Since November, the stock has appreciated by 36 per cent after the company reported earnings improvement in September quarter (Q2FY24) on strong demand for its vaccines and general medicine.

Consolidated profit for the Q2FY24 rose to Rs 218 crore from Rs 193 crore a year earlier. Revenue from operations rose 4.4 per cent year-on-year to Rs 957 crore.  EBITDA (earnings before interest, taxes, depreciation, and amortization) margins at 30.1 per cent.

The management said Q2 performance reflects an overall recovery with market share gains in several key promoted brands across all business units. The company’s focus in the coming quarters will remain on strong volume led performance in General Medicines and Paediatric vaccines, the management said.

GSK Pharma held leadership position for its key brands in relevant therapy areas such as anti-infectives and dermatology.
GSK would also explore innovative solutions using omnichannel strategy to expand its reach and coverage to target segments. It will continue to drive the expansion of the adult immunisation category with Shingrix (Zoster Vaccine Recombinant, Adjuvanted).

Pharma Index has witnessed breakout above eight year highs exhibiting strength and resumption of structural uptrend ahead. Within MNC Pharma companies Glaxo pharma has been in consolidation for over nine years and showing signs of turnaround with faster retracement on quarterly charts as it retraced preceding five quarter decline in just three quarters. Further current quarters volumes has been highest since March 2014 indicating large participation, technical analysts at ICICI Securities said.

The brokerage firm expects stock to surpass its multi year highs around Rs 1,800-1,830 band and accelerate the uptrend in CY24 towards Rs 2,180 being 138.2 per cent retracement of CY21-23 decline.

While interest in adult or adolescent vaccination has never been high in India despite the fairly successful Universal Immunization Program (UIP), COVID-19 vaccination drives started conversations on adult vaccination and have given it an impetus.

With increased life expectancy and a growing segment of the elderly population in India, healthy aging is emerging as a larger area of focus. A key intervention for healthy aging continues to be preventive health led by vaccination strategies. Adult vaccination is in a nascent stage in India with a large potential for growth. For instance, the virus that causes Shingles affects over 90 per cent of adults aged 50 years and above, GSK Pharma said in its FY23 annual report.