Technology

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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