GlaxoSmithKline was the subject of value buying by institutions on Thursday even as the scrip surged from its 52-week low in the past eight sessions.
The scrip of the pharma MNC climbed 3.91% to Rs 312.10 on BSE by 12:35 IST, as a result. A total of 35,668 GlaxoSmithKline shares changed hands on BSE by that time.
The scrip has already risen 12.8% to its current level from a 52-week low of Rs 276.20 on 17 February 2003. The scrip had earlier lost 38% to its 52-week low from its 52-week high of Rs 445 on 18 April 2002.
As per market sources, Enam Securities is accumulating on the counter over the past few sessions.
Budgetary expectations and the forthcoming new DPCO order are also cited as reasons for the buying support on the counter.
There are expectations that, in the forthcoming Union Budget 2003-04, the finance minister will scrap customs duties for life-saving drugs to zero import duty, thus benefiting pharma MNC , which import drugs and then sell in India. Currently, the effective duties on life-saving drug imports is 25%, inclusive of 5% basic duty, 16% CVD (counter availing duty) and 4% SAD (special additional duty).
Things could take a turn for the better for the GSK stock once the Drug Price Control Order is released. GSK is expected to be a major beneficiary of the new order as it has a very high portfolio of price-controlled products, which constitute about 65% of its sales.
Earlier, GSK said it expects a 50% rise in earnings this fiscal through its focus on 30 power brands and cost-cutting measures. Sales are likely to rise by 10%. As per reports, the company will focus on power brands in segments like anti-asthma and anti-infection drugs, vitamins and vaccines. These are expected to contribute 65-70% to the company's turnover in the next 2-3 years, from the current 60%.
GSK is the merged entity of erstwhile Glaxo India and SmithKline Beecham Pharmaceuticals India. The Indian merger followed the international merger of GlaxoWellcome and SmithKline Beecham to create Glaxosmithkline last year. However, Burroughs Wellcome still remains a separate entity in India due to differences in salary structure.
GlaxoSmithKline Pharmaceuticals' pharma division accounts for 77% of the company's sales, while the remaining 23% comes from other divisions.
For the third quarter ended 30 September 2002, GSK reported a 55% rise in net profit to Rs 37.38 crore on a marginal 5% increase in net sales to Rs 297.35 crore (Rs 2.97 billion).
As on 31 December 2002, the promoter held 48.83% stake in GSK, while the public and institutions held 22.83% and 23.95%, respectively.
