GLAXO - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 4.0

📊 Financial Overview: GlaxoSmithKline Pharmaceuticals Ltd (GLAXO) maintains a strong financial profile with a market cap of ₹44,456 Cr and a near-zero debt-to-equity ratio of 0.01. The company posted a PAT of ₹205 Cr this quarter, down from ₹260 Cr, reflecting a 12.7% profit variation. Despite the dip, return metrics are exceptional: ROCE at 62.6% and ROE at 46.4%, indicating highly efficient capital deployment.

💹 Valuation Metrics: The stock trades at a P/E of 47.4, above the industry average of 33.1, suggesting premium valuation. With a Book Value of ₹115, the P/B ratio is ~22.8. The PEG ratio of -2.39 signals earnings contraction, which may warrant caution. Dividend yield stands at a respectable 1.59%.

💊 Business Model & Competitive Advantage: GLAXO operates in the pharmaceutical and healthcare space, offering a portfolio of prescription medicines and vaccines. Its global brand strength, regulatory compliance, and established distribution network provide a durable competitive edge. The company benefits from consistent demand and strong parent backing from GSK plc.

📈 Technical Indicators: RSI at 31.4 suggests oversold conditions, indicating potential for a rebound. MACD at -26.4 shows bearish momentum. The stock is trading below both its 50 DMA (₹2,772) and 200 DMA (₹2,784), signaling short-term weakness. Volume is slightly above average, showing steady investor interest.

🎯 Entry Zone: A favorable entry range would be around ₹2,500–₹2,550, offering a better margin of safety and aligning with technical support levels.

🕰️ Long-Term Holding Guidance: GLAXO is a fundamentally strong pharma company with high returns and a stable business model. Long-term investors can consider accumulating on dips for defensive exposure and consistent dividend income.

✅ Positive

• Outstanding ROCE (62.6%) and ROE (46.4%) reflect superior capital efficiency.
• Debt-free balance sheet ensures financial resilience.
• EPS of ₹55.6 supports strong earnings performance.
• Dividend yield of 1.59% adds income appeal.

⚠️ Limitation

• PEG ratio of -2.39 suggests earnings contraction.
• Quarterly PAT declined from ₹260 Cr to ₹205 Cr.
• Premium P/B ratio (~22.8) may limit upside potential.

📉 Company Negative News

• FII holding declined by 0.10%, indicating cautious foreign sentiment.
• MACD and RSI suggest short-term bearish sentiment.

📈 Company Positive News

• DII holding increased slightly (+0.04%), showing domestic institutional support.
• Stock has gained 44.1% from its 52-week low of ₹1,921.

🏭 Industry

• Pharma sector benefits from stable demand and regulatory-driven innovation.
• Industry P/E of 33.1 reflects moderate valuation across peers.

🧾 Conclusion

• GLAXO is a high-quality pharma company with strong fundamentals and brand strength.
• Valuation is rich; consider accumulating near ₹2,500–₹2,550.
• Ideal for long-term investors seeking defensive exposure and consistent returns.