Buy Sanofi India; target of Rs 9820: ICICI Direct

ICICI Direct's research report on Sanofi India

Sanofi’s Q3CY20 revenues de-grew 11.9% YoY to Rs 687 crore mainly due to the full impact of divesture of a few products to Zentiva (Ankaleshwar slump sale) and continued impact of Covid-19 on some therapies. EBITDA margins improved 547 bps YoY to 28.0% due to lower other expenditure, better gross margins. Subsequently, EBITDA grew 9.5% YoY to Rs 192 crore. Reported PAT grew 5% YoY to Rs 133 crore. Delta vis-a-vis EBITDA was due to lower tax rate in Q3CY19.

Outlook

A strong growth track in top brands, measured new launches (including innovative launches) besides strong balance sheet and comfort on corporate governance front are some key attributes of MNC pharma companies including Sanofi. We maintain BUY with a target price of Rs 9820 (35x CY22E EPS of Rs 280.5).

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