Accumulate GSK Consumer; target of Rs 5988: Prabhudas Lilladher

GSK 2Q results were disappointing with 3% decline in MFD volumes amidst continuous pressure on discretionary spending by the consumers. 

GSK is adopting an aggressive strategy to boost volumes by 
1) re‐launch of Horlicks and Boost sachets at Rs5 
2) Re‐launch of Women’s Horlicks and Junior Horlicks and 
3) launch of Horlicks Growth plus to compete with players like Pediasure in the premium segment. 

While we expect gradual recovery in demand in line with our discretionary products, input cost pressures are likely to emerge due to increase in prices of SMP, Sugar and Malted Barley. GSK Asia has reduced the marketing margin on its sales from 16.75% to 15% which will have some impact on Business Auxiliary Income. We expect stunted profit growth in near term and estimate 7.6% CAGR in PAT over FY16‐19. GSK trades at 31.4xFY18 EPS of Rs 183 which is 20% discount to coverage universe which limits downside. Retain “Accumulate”.

Stay invested in SBI: Gaurang Shah

Gaurang Shah, VP at Geojit BNP Paribas Financial Services told CNBC-TV18, " State Bank of India  (SBI) is one of the banks that is under our positive coverage in the banking universe from the public sector undertaking (PSU) banking lot. 

With top-down scenario for interest rate cut, the only issue has been with PSU bank is the asset quality and the restructuring/provisioning issues but given the fact that it is the largest public sector banks and with the recent initiatives by the government this bank also would tend to get benefited." "My advise to the investors would be to hold on to it, wait out for the numbers that will be seeing in maybe about a week or fortnight from State Bank of India (SBI). 

From the near-term we are working with a target of about Rs 345 and if numbers are something soothing and asset quality does not disappoint and of course the NIMs improve, definitely we would revise it upwards, so hold as of now," he added.