We expect SIL’s revenue to clock 2.8% revenue CAGR while net profit should grow 23.7% over CY18-CY21E. Earnings growth should outpace revenue growth as the high-margin portfolio is growing faster than the rest of the business and tax benefit should also help earnings. Revenue growth is low single digit, reflecting divestment of Ankleshwar facility and resultant discontinuation of supplies to Zentiva. The key growth drivers for the company include its insulin portfolio (led by flagship brand Lantus), next generation insulin (Toujeo), Allegra and recently launched Combiflam topical pain relief gel/spray. Owing to the recent run up in SIL stock price, we recommend an Accumulate rating with a target price of Rs7,280.
Despite this deal, the overall thesis for Sanofi remains unaltered as one of the fastest growing companies in India in anti- diabetic therapy. It has launched Toujeo within just three years of its launch in the US, which suggests that it is prepared to launch core innovative products in India, banking on growth prospects in the anti-diabetic category. A strong growth track in top brands and capability of new launches (including innovative launches) besides strong balance sheet and non- existent corporate governance concerns are some key attributes of MNC pharma companies including Sanofi. Our revised target price is Rs 7335 based on 35x FY21 EPS of Rs 209.6.
Strong growth track record in top brands and capability of new launches (including innovative launches) are some key attributes of MNC pharma companies including Sanofi. The issues like NLEM and other regulatory aspects are mostly in the price. On the flip side, looming threat of Jan Aushadhi and trade generics are some head winds at this juncture. On the exports front, five year supply agreement as per Sanofi- Advent deal bodes well for the company to maintain growth tempo (CY14-18 CAGR of 14%). We arrive at a target price of Rs 7500 based on 35x FY21 EPS of Rs 214.
We expect SIL’s revenues to clock 9.26% revenue CAGR while net earnings should grow 17.7% over CY18-CY20E. Earnings growth should outpace revenue growth as the high- margin portfolio is growing faster than the rest of the business. The key growth drivers for the company include its insulin portfolio (led by flagship brand Lantus), next generation insulin (Toujeo), Allegra and recently launched Combiflam topical pain relief gel/spray. Owing to the recent run up in SIL stock price, we recommend an accumulate rating on SIL with a target price of Rs6,471.
We expect SIL’s revenues to clock 9.26% revenue CAGR while net earnings should grow 17.7% over CY18-CY20E. Earnings growth should outpace revenue growth as the high-margin portfolio is growing faster than the rest of the business. The key growth drivers for the company include its insulin portfolio (led by flagship brand Lantus), next generation insulin (Toujeo), Allegra and recently launched Combiflam topical pain relief gel/spray. We have retained our rating on SIL with a revised target price of Rs6,471 (from Rs6,411 earlier).
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). However, we re-iterate our Buy rating on the stock, given (1) good prospects in the chronic categories like cardiac, respiratory, diabetes, (2) volume rather than pricing led growth and (3) industry outperformance by the top brands, despite a high base.
Sanofi India’s (SIL) revenues in CY18 stood at Rs27,708mn, showing a growth of 11% compared to a year ago. The revenue mix witnessed a sharp change in favour of exports. The share of exports in total revenues increased to 30% from 26%. Exports grew 25% YoY, while the domestic business underperformed because of price cuts and potentially a correction in channel inventory. We believe the 100bps decline in gross margin on YoY basis can be primarily attributed to a higher share of export sales, which are associated with higher raw material costs. Apart from a rising share of exports, the company also went for price cut of Amaryl, which is one of the top brands in SIL’s portfolio. Amaryl witnessed price cuts in some of its extension brands (Amaryl MV). Plain Amaryl (Glimepiride) is already under price control. SIL has given guidance of maintaining its export volume and hopes to grow in line with Indian Pharmaceutical Market (IPM) in the domestic market. We have assigned Accumulate rating (from BUY earlier) to SIL with a target price of Rs6,411 (from Rs7,570 earlier).