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Sanofi India Ltd Research Report - 26th Jul 2016

Pharmaceutical | Published on Jul 26th 2016

IT

Sanofi India (Sanofi) posted a robust set of numbers for 2QCY2016. It posted a 9.9% yoy growth in sales to Rs565cr, although the same are lower than our expectation. The bottom-line came in higher than our expectation on the back of a 30.5% surge in other income during the quarter. On the operating front, the company reported a gross margin of 50.5% V/s 48.3% in 2QCY2015, which resulted in an OPM of 18.2% V/s 16.7% in 2QCY2015. The proportionate expansion in the OPM was less than that in the gross margin as other expenses rose by 15.6% yoy during the quarter. The net profit for the quarter came in at `85.3cr V/s Rs64.2cr in 2QCY2015. We maintain our Neutral rating on the stock. Sales underperform: For the quarter, the company posted sales of Rs565cr, a yoy growth of 9.9%. Gross margin stood at 50.5% V/s 48.3% in 2QCY2015, which enabled the company to post an OPM of 18.2% V/s 16.7% in 2QCY2015. The proportionate expansion in the OPM was less than that in the gross margin, as other expenses rose by 15.6% yoy during the quarter. Expansion in OPM along with a 30.5% yoy growth in other income aided the net profit to come in at Rs85.3cr V/s Rs64.2cr in 2QCY2015. Outlook and valuation: We expect net sales to post a 14.6% CAGR to Rs2,692cr and EPS to register a 21.2% CAGR to Rs169.2 over CY2015–17E. At the current levels, the stock is trading at 29.9x and 27.1x its CY2016E and CY2017E earnings, respectively. Given the fuller valuations, we recommend a Neutral rating on the stock.

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CMP 4,582
Target Price
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)9,797.42
MCAP NSE (Rs in Cr)9,753.90
P/E (x)30.91
EPS (Rs.)137.62
BV (Rs.)756.74
Div Yield (%)1.53
FV (Rs.)10.00
P/BV (x)5.62
EV/Sales (x)4.21
EV/EBITDA (x)18.61

Shareholding Pattern (%)

Promoter60.0
Foreign15.0
Institution15.0
Public & Others6.0
Corporate4.0
Grand Total100.0

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