Sanofi India share price: Sharekhan retains Buy ratingwith a revised price target of Rs 9600

Sanofi India had hosted an investor webinar to discuss the business updates and management’s commentary was positive, pointing towards a healthy growth outlook for the company. The Indian Pharmaceutical Market (IPM) has recovered posting a growth of 5% yoy for October 2020 - February 2021 as compared to a 2.5% decline in first half of FY21. Pick-up in IPM is largely driven by growth in chronic therapies. Sharekhan retains Buy rating on Sanofi India with a revised price target of Rs 9600. Sanofi India share price today is Rs 8235, up Rs 37 or 0.45%. 

Sanofi India's Management expects this trend to sustain going ahead, which bodes well for Sanofi India. Further, the company has laid its focus on the anti-diabetic segment for growth, as it has a strong presence in the segment because of a leading position commanded by its brands Lantus and Amaryl.

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Along with the anti-diabetic segment, Sanofi India is present in the cardiology segment, which is one of the fastest growing segments in the IPM. Together, anti-diabetic and cardiac segments constitute around half of the topline. Sanofi India’s top 10 brands account for around 75% of sales and management expects these to outperform the market’s growth, thus pointing at a healthy growth outlook.

Moreover, efforts to increase the geographical reach to tier II towns and rural areas would add to revenue growth. Moreover, in CY2020, the company has divested its Ankaleshwar plant, which catered to export markets. Post the divesture, revenue mix has shifted in favour of the domestic business, which commands higher margins, leading to a favourable mix.

Moreover, adaption of the digital platform for reaching out to physicians and enhancing the engagements could bring in some cost efficiencies. Thus, favourable mix and cost efficiencies are expected to result in a 120 bps OPM expansion over CY20-CY22E. Consequently, Sanofi India’s PAT is expected to report double-digit 12% CAGR over CY20-CY22E.