Sanofi India's Q2CY19 results (Outperformer) - Soft quarter
Q2CY19 result highlights
- Revenue for the quarter was Rs7.5b (+9.4% yoy) in-line with est.
- Gross margins came much lower at 54.4% vs 57.1%/59.6% in Q1CY19/Q2CY18. While segmental revenue breakup is not known, we think these quarterly fluctuations are likely to be driven by variations in the export business and currency fluctuations.
- Staff costs grew 14% while SGA was flat yoy for the quarter.
- Reported EBITDA came in lower at Rs1.58b (-4% yoy) below est of Rs1.65b. EBITDAM of 21.1% vs 24.1% booked in Q2CY18 and lower than est of 22.2%. Miss was primarily driven by lower GMs.
- Other income came lower at Rs234m vs est Rs220m. Tax rate was at 37.2% vs est of 36.5%.
- PAT came lower at Rs974mn (-2% yoy) vs est of Rs1bn
Key positives: Flat SGA
Key negatives: Lower GM/EBITDAM
Impact on financials: We have reduced our CY19/20 earnings by 8/7%
Valuations & view
A strong marketing presence in India, strategy to aggressively invest in growth, and strong presence in fast growing segments (diabetes and CVS) make Sanofi one of the more promising MNC pharma companies in India. We maintain Outperformer given attractive valuations and steady improvement in operating performance. The stock trades at 15.6x EV/ EBITDA and 29.5x CY20E PER, which are at discount to those of MNC peers like Glaxo. Slowdown in exports and continued regulatory interventions in domestic market remain key risks. Maintain Outperformer with a target price of 6671 (32x FY21 EPS). ​
Sanofi India is engaged in the research, development, manufacture and production, of: (i) new and existing drugs, pharmaceuticals, haemaccel and biologicals; and, (ii) liquid injectibles, tablets, capsules, ointments, antibiotic powders, drops, syrups, Co.'s products include: Daonil, Avil, Soframycin, Combiflam, Tarivid, Streptase , Rifater and Rifadin INH, Rabipur, Claforan and Rulide (parenteral anti-infectives) Amaryl (oral anti-diabetic), Tavanic (anti-infective), Vaxcem Hib (Haemophilus Influenza type B (HIB) Vaccine), Morupar (measles, mumps, rubella (MMR) Vaccine), Insuman (human insulin) and Cardace-H.
IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.