Fundamental Result Update

Sanofi India Q2CY19 Result Update



We believe the insulin led products (Lantus/Toujeo) are expected to deliver the earnings for SIL over FY19-FY21e. Robust OTC products, marketing presence in India coupled with focus on and strong presence in the fastest growing segments make SIL amongst the best MNC pharma companies in India. However, a recovery in margins led by price hikes in key brands remains key to SIL’s bottom-line. At current levels, the stock is trading at rich valuations of 27.3x CY20E thus offers limited margin of safety. We have valued the stock at PE of 25x (27x earlier) to its CY20E EPS of 220, with a target price of Rs 5500 (vs Rs 5946 earlier). We have a REDUCE rating (vs HOLD earlier) on the stock with a downside of 8%


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