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Nirmal Bang Report
Key Points
Sanofi India Ltd.'s Q2 CY23 results were a miss on our/consensus estimates on all parameters as National List of Essential Medicines price reduction on Lantus weighed down on revenue and profitability.
Revenue grew merely by 1% YoY, despite exports (15% of revenue in CY22) growing 30% YoY due to NLEM price cuts. Ebitda margin improved by 220 bps YoY to 25.2% led by the company's focus on cost rationalisation.
We remain positive about Sanofi India on the back of pure domestic play, strong balance sheet, healthy free cashflow, high return ratios and reasonable valuation.
Also, the new Managing Director's focused approach on limited therapies, innovation for India only, cost rationalisation and better utilisation of resources are likely to improve the mix and efficiency.
We maintain our 'Buy' rating on Sanofi India with a revised target price of Rs 8,542 valuing it at 25 times June-25E earnings per share.
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