Sanofi India - 1QCY2016 Result Update - Angel Broking

Sanofi India (Sanofi)'s 1QCY2016 results have come in lower than our expectation; the company posted a 10.1% yoy growth in revenue to Rs. 506cr V/s an expected Rs. 593cr. On the operating front, the gross margin came in at 52.1%, almost in line with our expectation, and V/s 47.8% in the corresponding period of last year. The OPM came in at 18.0% V/s an expected 20.0% and V/s 11.7% in the corresponding period of last year. Consequently, the PAT came in at Rs. 81cr (V/s an expected Rs. 88cr), a yoy growth of 67.9%. We recommend an Accumulate rating on the stock.

Lower-than-expected results: The company posted a 10.1% yoy growth in revenue to Rs. 506cr (V/s an expected Rs. 593cr). 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 52.1%, almost in line with our expectation, and V/s 47.8% in the corresponding period of last year. The OPM came in at 18.0% V/s an expected 20.0% and V/s 11.7% in the corresponding period of last year. Consequently, the PAT came in at Rs. 81cr (V/s an expected Rs. 88cr), a yoy growth of 67.9%. Tax as % of PBT was 35.3% V/s 26.5% in 1QCY2015. Other income for the quarter grew 30.0% yoy to Rs. 64cr.

Outlook and valuation: We expect net sales to post a 14.6% CAGR to Rs. 2,692cr and EPS to register a 21.2% CAGR to Rs. 169.2 over CY2015–17E. At current levels, the stock is trading at 28.7x and 26.1x its CY2016E and CY2017E earnings, respectively. Given the valuations, we recommend an Accumulate rating on the stock.

Shares of Sanofi India Ltd was last trading in BSE at Rs.4380 as compared to the previous close of Rs. 4399.9. The total number of shares traded during the day was 115 in over 36 trades.

The stock hit an intraday high of Rs. 4400 and intraday low of 4352.05. The net turnover during the day was Rs. 504657.

Source : Equity Bulls

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