Sanofi India - 1QCY2013 Result Update - Angel Broking

For 1QCY2013, Sanofi India reported results lower than expectations, both the on top-and bottom-line fronts. Sales grew by 12.5% yoy; however the net profit grew by just 10.5% yoy, due to lower-than-expected OPM. Given the valuations, we recommend a Neutral rating on the stock.

Below-expectation results: Sanofi's net sales grew by 12.5% yoy to Rs. 363cr for 1QCY2013, lower than our estimate of Rs. 401cr. The company reported a gross margin of 51.8% (50.9% in 1QCY2012), higher than our estimate of 49.5%. However, the OPM came in at 13.1%, lower than our estimate of 14.6%, due to a higher rise in other expenses, which rose by 28% yoy. The net profit came in at Rs. 44cr, up by 10.5% yoy, lower than our estimate of Rs. 50.1cr.

Outlook and valuation: We expect net sales to post a 13.3% CAGR to Rs. 1,917cr and EPS to register a 13.4% CAGR to Rs. 99.1 over CY2012-14. At current levels, the stock is trading at 27.6x and 25.8x CY2013E and CY2014E earnings, respectively. We recommend a Neutral rating on the stock.

Source : Equity Bulls

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