GSK Pharma’s innovative portfolio and vaccine launches drive FY27 growth outlook

Investment View and Valuation

Motilal Oswal Financial Services Limited (MOFSL) maintained a Neutral rating on GlaxoSmithKline Pharmaceuticals (GLXO) in its August 3, 2026 results update. The broker sees limited upside from the prevailing market price despite an improving growth outlook. It raised its FY28 estimates by 3% and values GLXO at 35 times 12-month forward earnings to derive a target price of Rs 2,870.

1QFY27 Financial Performance

GLXO reported better-than-expected revenue growth in 1QFY27 after eight quarters of subdued performance. Revenue increased 16.5% year on year to Rs 940 crore, ahead of MOFSL's estimate of Rs 880 crore. EBITDA grew 17.7% year on year to Rs 300 crore, broadly in line with the broker's Rs 290 crore estimate, while adjusted PAT rose 15.7% to Rs 240 crore versus the estimate of Rs 230 crore.

Gross margin improved by 80 basis points year on year to 65.1%. EBITDA margin expanded by 30 basis points to 31.5%, but remained below MOFSL's estimate of 32.6% as other expenses increased by 250 basis points as a percentage of sales. Lower employee expenses, down 200 basis points of sales, partly offset the higher marketing expenditure.

Innovation-Driven Portfolio Supports Growth

The report identifies GLXO's steady shift towards an innovation-driven portfolio as the central growth driver. The innovative portfolio contributed around 7% of 1QFY27 sales, compared with 4% in 1QFY26, led by oncology, adult vaccines and respiratory therapies.

General Medicines grew in double digits, with Augmentin and T-Bact increasing 12.8% and 17.9% year on year, respectively. The respiratory portfolio gained traction as Nucala expanded patient reach and Trelegy Ellipta saw greater adoption through new market-access pathways. Private vaccines, including Infanrix Hexa and Fluarix Tetra, remained strong.

Shingrix prescriptions rose 65% year on year and annual sales crossed Rs 100 crore on a moving annual total basis, supported by healthcare-professional engagement and endorsement.

Oncology, Vaccines and New Product Pipeline

Oncology is an emerging growth platform led by Jemperli and Zejula. The oncology field force stands at around 45, with further hiring underway. Management is also adding coverage in liver disease and has around 2,000 medical representatives for General Medicines and 200 for established vaccines.

Arexvy, the RSV vaccine, has received marketing authorisation in India. MOFSL expects the Blenrep launch to strengthen the adult-vaccine and innovative-products pipeline, while management indicated that belantamab commercialisation is expected in 2QFY27 or 3QFY27.

Around 40% of the DF portfolio is linked to National List of Essential Medicines products. Around 40-45% of the General Medicines category within the DF portfolio is under NLEM.

Management Outlook and Investment Requirements

Management expects to retain an EBITDA margin of around 34% in FY27. It expects the base business to grow 8-10% annually, while overall growth including new products is expected to be 13-14% over the medium term.

Investments remain elevated across oncology, adult vaccination and paediatric vaccination, alongside expansion of the targeted healthcare-professional base. These investments explain why EBITDA growth lagged revenue growth in 1QFY27.

MOFSL Estimates and Growth Thesis

MOFSL forecasts revenue CAGR of around 14% and earnings CAGR of around 18% over FY26-28. Its growth thesis rests on the following factors:

• Scaling oncology, adult vaccines and respiratory therapies.
• Stronger offtake of recently launched products.
• Continued marketing and healthcare-professional engagement.
• Support from established brands and digital engagement in General Medicines and Vaccines.