Feb 27, 2013, 03.16 PM | Source: Moneycontrol.com
Motilal Oswal has maintained neutral rating on Sanofi India with target of Rs 2015 in its February 26, 2013 research report.
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CMD, Motilal Oswal Financial Services (MOFSL) |
“Sanofi India's (SANL) 4QCY12 operational performance was above estimates, with 18.6percent YoY growth in net sales to INR4b (v/s est INR3.93b) and 28.6percent YoY growth in EBITDA to INR507m (v/s est INR477m). EBITDA margin expanded by 100bp YoY to 12.7percent, higher than estimate of 12percent, mainly due to lower other expenses. Adj PAT grew 24.3percent YoY to INR448m and was higher than our estimate of INR377m, boosted by higher other income (INR382m v/s est of INR279m). PAT growth is lower than the EBITDA growth due to change in accounting policy (since 3QCY12), which has increased depreciation & amortization cost.”
“We believe SANL will be one of the key beneficiaries of the patent regime in the long term. The parent has a strong R&D pipeline with a total of 64 products (including vaccines) undergoing clinical trials, of which 17 are in Phase-III or pending approvals, some of which are likely to be launched in India. However, SANL's profitability has declined significantly in the last 6 years, with EBITDA margin declining from 25percent for CY06 to 15.6percent for CY12, mainly impacted by discontinuation of Rabipur sales in the domestic market, lower export growth and higher staff & promotional expenses.”
“RoE declined from 28.6percent to 14.8percent over the same period. Post 4QCY12 performance, we have retained our EPS estimates for CY13E/CY14E as the outperformance during the quarter was mainly driven by higher other income, which we conservatively expect to normalize over the next two years. Based on our estimates, the stock is valued at 26.7x CY13E and 22.9x CY14E EPS. We believe the stock performance is likely to remain muted in the short term, until clarity emerges on future growth drivers. Maintain neutral with a target price of INR2,015 (20x CY14E EPS),” says Motilal Oswal research report.
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