Sanofi India Q3 Results Review

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Sanofi India Ltd.’s Q3 CY22 performance was below our estimates. Revenues declined 8.3% YoY to Rs 6.9 billion (our estimate: Rs 7.7 billion) due to weak performance in key brands.

Ebitda margin remained flat YoY, but grew 330 basis points QoQ, aided by strong gross margin expansion. Adjusted profit after tax declined 14.5% YoY to Rs 1.3 billion (our estimate: Rs 1.5 billion).

In the past few years, Sanofi India’s growth and profitability were fuelled by power brands which remains the key growth driver.

We remain positive on the company given its high exposure in the fast-growing chronic therapy segment in domestic formulations, strong balance sheet with deep cash reserves, and strong brand equity built over the years.

While we expect near-term performance to be modest but the recent correction in stock price (~19% in past six months) has made valuations attractive.

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