Glaxo has reported disappointing results for the year FY01 with the net profit falling 8.7% in the current year. A part of the reason is the trade boycotts of its products in some southern states, which reduced offtake by wholesalers and retailers. The company’s explanation for the boycott is that there was a change in the sales tax rates, which were passed on in the prices. The topline growth has been mainly a price led growth.
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The results are also indicative of the tough domestic pharmaceutical environment and Glaxo has not been able to fulfill the promise (made after the first half results) that it would be able to outperform the industry.
The company is likely to announce the merger with SmithKline Pharma within the coming quarter. See
Glaxo Smithkline merge. The stock is quoting at a price of Rs 434 which implies an earnings multiple of 34 times.
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