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Sanofi India Ltd Research Report - 21st Jan 2016

Pharmaceutical | Published on Oct 30th 2015

IT

Sanofi India (Sanofi)’s 3QCY2015 results have come in marginally higher than our expectation. The company posted a 13.4% yoy growth in revenues to Rs553cr V/s an expected Rs536cr. On the operating front, the gross margin came in at 52.0% V/s an expected 48.3% and V/s 48.2% in the corresponding period of last year. The OPM came in at 19.7% V/s an expected 17.8% and V/s 15.7% in the corresponding period of last year. Consequently, the PAT came in at Rs72.5cr (V/s an expected Rs70.0cr), a yoy growth of 16.9%. We recommend a Neutral rating on the stock. Better-than-expected results, mainly on OPM front: The company posted a 13.4% yoy growth in revenues to Rs553cr V/s an expected Rs536cr. We expect revenue growth to sustain in the coming quarters with improvement in volumes along with likely price hikes in DPCO products. On the operating front, the gross margin came in at 52.0% V/s an expected 48.3% and V/s 48.2% in the corresponding period of last year. The OPM came in at 19.7% V/s an expected 17.8% and V/s 15.7% in the corresponding period of last year. Consequently, the PAT came in at Rs73cr (V/s an expected Rs70cr), a yoy growth of 16.9%. Tax as % of PBT was 40.7% V/s 34.0% in 3QCY2014. Other income for the quarter, at Rs42cr, was same as in the corresponding period of last year. Outlook and valuation: We expect net sales to post a 10.5% CAGR to Rs2,371cr and EPS to register a 33.1% CAGR to Rs151.5 over CY2014–16. At current levels, the stock is trading at 36.0x and 28.1x its CY2015E and CY2016E earnings, respectively. Given the rich valuations, we recommend a Neutral rating on the stock.

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CMP 4,262
Target Price
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)9,808.48
MCAP NSE (Rs in Cr)9,833.00
P/E (x)30.95
EPS (Rs.)137.62
BV (Rs.)756.74
Div Yield (%)1.53
FV (Rs.)10.00
P/BV (x)5.63
EV/Sales (x)4.24
EV/EBITDA (x)18.77

Shareholding Pattern (%)

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

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