Weekly Stock Update

STOCK UPDATE

HOLD

CMP	:	Rs7,500
PT	:	Rs7,931

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GlaxoSmithKline Consumer Healthcare

Share-swap deal is favourable for shareholders

• HUL is acquiring 100% stake in GSK Consumer in all-equity deal of 4.39 HUL shares for every one share held by the shareholders of GSK Consumer, resulting in a deal value of Rs. 31,700 crore.
• The share-swap deal is positive for the shareholders of GSK Consumer, as they are getting HUL’s shares at a discounted rate (of Rs. 95-100 per share) in view of the current valuations of HUL.
• Further, GSK Consumer has strong cash balance of Rs. 3,800 crore, which we expect will be distributed among shareholders post the merger (HUL’s past five years’ dividend payout is ~83%).
• Hence, we advise investors to stay invested in GSK Consumer to create value post the merger (expected to complete in a year’s time).
• We maintain our Hold rating on GSK Consumer with a revised PT of Rs. 7,931.

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HOLD

CMP	:	Rs443
PT	:	Rs525

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Sun Pharmaceutical Industries

SEBI Investigation outcome an overhang; Downgrade to Hold

• Sun Pharma continues to remain surrounded by issues, the recent one being a whistle blower case filed with SEBI.
• Related party structure raises concerns among investors.
• We downgrade our recommendation to Hold with downward revised PT of Rs. 525.

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