Highest Dividend Of Q1FY25 So Far, Rs 117/Share Payout Ahead: Midcap Pharma Stock To Buy For Rs 11,300 TP

The highest dividend payout of Q1FY25 so far is of Rs 117 per share. It will be paid by a midcap pharma stock trading over Rs 8,400. It is known as Sanofi India. The company has fixed a record date for its hefty dividend in early May to determine eligible shareholders. And while there is still time in the record date, brokerages have recommended buying Sanofi shares for the highest target price up to Rs 11,300.

On BSE, Sanofi's share price stood at Rs 8412.70 apiece, down by 2.5% with a market cap of Rs 19,374.45 crore. The stock's 52-week high and low is at Rs 9,370.35 and Rs 5,329.70 respectively.

In a year, Sanofi's share price has rallied by over 40% on BSE.

Sanofi India Dividend:

As per the regulatory filing, Sanofi has recommended a final dividend payout of Rs 117 per share having a face value of Rs 10 each for the financial year ending December 2023. Sanofi follows a calendar year for financial results.

For the said dividend, Sanofi fixed May 3rd as the record date to determine eligible shareholders. It is planning to pay the dividend on or after May 23, 2024.

Despite Sanofi following a calendar year, its dividend payout of Rs 117 per share is still the highest from April to June 2024, up till now.

Also, notably, Sanofi paid an interim dividend of up to Rs 50 per share to those members whose names appear on the Register of Members of the company on 7th March 2024 being the Record Date. The said dividend was paid on or after 20th March 2024.

Sanofi India Buy Call:

For the period January to March 2024 earnings, in the case of Sanofi, Nirmal Bang's report said, "Revenue is expected to grow by mere 7% YoY due to the launch of new long-acting insulin drugs and divestment of brands. Led by cost optimization initiatives, EBITDA margin correction has moderate to 255bps YoY to ~28.7%. Net profit margin is expected to correct by 530bps YoY, led by an underperformance in the Acute portfolio."

Nirmal has recommended BUY for a target price of Rs 9,212.

Moreover, B&K Securities has recommended BUY for a massive target of Rs 11,300. In its report, the brokerage said, "Sanofi reported an operationally healthy 4Q quarter even as it continues to absorb Lantus NLEM impact (annual brand sales have fallen to Rs 4.5 bn). The focus remains on driving volume growth (Lantus grew by 5% 4Q) and market share in Insulin segment where it has leading brands like Lantus, Toujeo, Insuman, Apidra and remains on track to launch new drug Soliqua (combi of Glargine + GLP1 drug Lixisenatide)."

B&K also said that the company's future plans include the launch of several new drugs over the next two years including Soliqua, Insutage (from parent pipeline), Branded Gx (Sanoxaban & Carmada), line extensions (Frisum, Cetapin, Allegra). New launches coupled with focus on core brands like Lantus, Allegra, Cardace, Amaryl, Frisium, Combiflam, Avil, Clexane, Toujeo, etc. to help improve topline growth to 8-10% in the next one-two years (closer to IPM growth).

Also, the brokerage stated that listing of Consumer Health business (1:1 ratio) to unlock value for shareholders that is expected to be completed by 1HCY24E. It added, "Our SOTP suggests upsides driven by appropriate valuations ascribed to the consumer health business which has better profitability (8-10% higher margins than consolidated business), likely to trade at P/E of 35-40x with a market cap of US$ 1.2-1.4 bn. This implies residual business of Sanofi (Domestic Rx + Exports) would be available at around 33x forward earnings."

That being said, B&K added, "We thus find current valuations attractive and revise our target price higher to Rs 11,300 per share (25% upside), valuing Sanofi at 35x CY25E earnings, 12-20% discount to peers like GSK and Abbott. As per our revised Bull case scenario where we have assumed higher growth rates and P/E multiples for both Pharma Rx and CH business, we get higher target price of Rs 14,200 (57% upside), valuing Sanofi at 40x CY25E earnings. We believe the Consumer Health de-merger and growth revival plans for its Core Pharma Rx business in India puts focus back on Sanofi thereby making current valuations attractive. Maintain Buy rating on Sanofi India."

Sanofi India Limited is one of the entities through which Sanofi operates in India. Sanofi is one of the world's leading healthcare companies, and its 100% subsidiary - Hoechst GmbH, is the major shareholder of Sanofi India Limited and together hold 60.4% of its paid-up share capital.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.