Motilal Oswal is bullish on Sanofi India has recommended buy rating on the stock with a target price of Rs 6930 in its research report dated May 07, 2019.
Motilal Oswal's research report on Sanofi India
Sales increased 16% YoY to INR7.2b (our estimate: INR6.8b) in 1QCY19. Gross margin shrank 250bp YoY to 57% due to the change in the product mix. However, EBITDA margin contracted at a much lower rate of 30bp YoY to 21.4% (our estimate: 20%), supported by lower other expenses (-110bp YoY to 21.2% of sales) and employee cost (-110bp YoY to 14.4%). Absolute EBITDA increased 14% YoY to INR1.6b (our estimate: INR1.4b). PAT grew 12.6% YoY to INR929m (our estimate: INR828m).
We cut our CY19/20 earnings estimates by 5%/4.5% to factor in the lower gross margin and the higher tax rate. We roll our target price to a 12-month forward earnings basis and continue valuing SANL at 32x P/E to arrive at a price target of INR6,930 (prior: INR7,000).
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