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ICICI Securities
Sanofi India (Add)
Target: ₹8,594
CMP: ₹8154.65
Sanofi India’s (SANL) Q4-CY20’s performance remained weak during the quarter. Revenue declined 12.8 per cent y-o-y to ₹720 crore but sequentially improved by 4.9 per cent. EBITDA margin improved 160 bps y-o-y with lower expenses but declined by 480 bps q-o-q to 23.2 per cent. Adjusted PAT grew 7.4 per cent to ₹120 crore.
As per AIOCD data, company reported a y-o-y growth of 3.8 per cent for the quarter. In the past few years, the company’s growth and profitability was fuelled by the power brands. We remain positive on SANL considering high visibility of strong growth from its chronic therapy exposure in domestic formulations, strong balance sheet with deep cash reserves, and strong brand equity built over the years.
We reduce our revenue and EPS estimates by 1-2 per cent and 7-8 per cent for CY21-CY22 to factor in lower sales and other income. Maintain ADD rating with a revised target price of ₹8,594/share based on 33xDec’22 EPS (earlier: ₹8,731/share based on 33xJun’22).
Key downside risks are: addition of key drugs in NLEM, product concentration, government intervention, and presence of unlisted promoter company.
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