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Decent performance with strong margins…

About the stock:

Sanofi offers drugs in therapies like diabetes (insulins & orals), cardiology, thrombosis, anti-infective, CNS, allergy, vitamins, minerals & supplements.

* Lantus, Allegra & Combiflam are in Top 100 pharmaceutical brands in India

* Sanofi is one of the fastest growing companies in India in anti-diabetic therapy

Q2CY21 Results:

Sanofi India reported robust Q2CY21 results.

* Sales were up 11.1% YoY to | 789.1 crore

* EBITDA in Q2CY21 was at | 247.1 crore, up 39% YoY with margins at 31.3%

* Consequent PAT was at | 178.3 crore (up 31.9% YoY)

What should investors do?

Sanofi’s share price has grown by ~1.7x over the past five years (from ~| 4447 in June 2016 to ~| 7672 levels in June 2021).

* We remain positive and retain our BUY rating on the stock Target Price and Valuation: We value Sanofi at | 9750 i.e. 35x P/E on FY23E EPS

Key triggers for future price performance:

* Future launches from its global staple along with brand extensions

* Access to innovative molecules from parent like recently launched antidiabetic drug Toujeo

* Strong balance sheet, good dividend payout track record and comfort on corporate governance

* Consistent performer despite four core brands are under price control

Alternate Stock Idea:

Apart from Sanofi, among MNC coverage we like Abbott.

* We continue to believe in Abbott’s strong growth track in power brands and capability in new launches on a fairly consistent basis

* BUY with a target price of | 19235

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