Sanofi India Limited is an India-based pharmaceutical company. The Company provides medicines for the treatment of patients in several therapeutic areas: cardiology, thrombosis, oncology, diabetes, central nervous system, internal medicine and consumer healthcare. The Company is engaged in diverse activities, such as producing active pharmaceutical ingredients (API), manufacturing and handling formulations and exporting. The Company has two manufacturing facilities at Ankleshwar, Gujarat (chemistry and pharmaceuticals) and at Verna, Goa (pharmaceuticals). The Company's products include Cardace, Cardace am, Cardace H, Lasilactone, Lasix, Sitelodip, Sitelol AM, Sitelol XR, Sitestat, Sitestat F, Telsite, Tesite H, Telsite AM, Clexane, , Amaryl, Amaryl M, Apidra, Cetapin XR, Daonil, Daonil M, Semi-Daonil, Insuman, Lantus, Trental 400, Glimsite, Glimsite M, Glimsite MP, Mesite XR, Rejusite, Vogsite MD, Granocyte, Taxotere, Allegra, Allegra Suspension, Avil and Cosavil Flu, among others.
Sanofi India (Sanofi)’s 2QCY2015 results have come in below our expectations on the sales and net profit front. The company posted a 5.7% yoy growth in revenues to Rs514.3cr V/s an expected Rs538.8cr. On the operating front, the gross margin came in at 48.3% V/s an expected 47.8% and V/s 49.4% in the corresponding period of last year. The OPM came in at 16.7% V/s an expected 17.0% and V/s 16.2% in the corresponding period of last year. Other expenses dipped by 8.5% during the quarter, thus aiding expansion in operating margin, inspite of gross margin contraction. Consequently, the PAT came in at Rs64.2cr (V/s an expected Rs70.1cr), a yoy growth of 11.7%. Other income during the quarter came in at Rs45.3cr V/s Rs32.6cr in 2QCY2014, while tax as % of PBT was 37.5% V/s 34.1% in 2QCY2014. We recommend a Neutral rating on the stock. Lower-than-expected results on all fronts: The company posted a 5.7% yoy growth in revenues to Rs514.3cr V/s an expected Rs538.8cr. On the operating front, the gross margin came in at 48.3% V/s an expected 47.8% and V/s 49.4% in the corresponding period of last year. The OPM came in at 16.7% V/s an expected 17.0% and V/s 16.2% in the corresponding period of last year. Other expenses dipped by 8.5% during the quarter, thus aiding expansion in operating margin, inspite of gross margin contraction. Consequently, the PAT came in at Rs64.2cr (V/s an expected Rs70.1cr), a yoy growth of 11.7%. Other income during the quarter came in at Rs45.3cr V/s Rs32.6cr in 2QCY2014, while tax as % of PBT was 37.5% V/s 34.1% in 2QCY2014. Outlook and valuation: We expect net sales to post a 12.4% CAGR to Rs2,455cr and EPS to register a 25.1% CAGR to Rs133.9 over CY2014–16. At current levels, the stock is trading at 34.5x and 28.2x its CY2015E and CY2016E earnings, respectively. Given the rich valuations, we maintain our Neutral rating on the stock.
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