Sharekhan Recommends To Buy This Stock For 27% Upside, In 1 Year

Brokerage firm Sharekhan recommends investors to buy the stocks of Sanofi for 27% return. The company has declared a sturdy dividend per share of Rs. 490 for CY2021 as against Rs. 365 in CY2020.

Target Price

The Current Market Price (CMP) of Sanofi is Rs. 7277. Sharekhan has estimated a Target Price for the stock at Rs. 9250. The stock is expected to offer a 27% upside, in 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 7277
Target Price	Rs. 9250
1 year return	27.00%

Company performance

Sanofi India Limited (Sanofi) has reported weak performance for the quarter and results missed estimates. Although numbers are not comparable on a y-o-y basis due to the hiving off of the neutraceuticals business. Revenues and adjusted PAT declined by 4.5% and 26.5% yoy respectively. Operating profit margin (OPM) contracted steeply by 469 bps y-o-y, reflecting cost pressures and operating de-leverage. Given the weak performance for Q4CY2021 with results missing estimates, Sharekhan has revised downwards our earnings estimates by 8% and 9% for CY2022E and CY2023E, respectively.

Comments by Sharekhan

About the stocks, Sharekhan commented, "Divesture of Nutraceuticals business as well as slow moving brands, to remove a drag on the company's growth and would facilitate enhanced focus on key growth areas - anti diabetes, cardiac. Sanofi has divested its slow-moving business and has laid its focus on the anti-diabetic's segment for growth and is looking to enhance its geographical penetration. Moreover, a chronic-heavy portfolio, strong performance of top brands, and a dominant share in their respective categories provide comfort on growth ahead."

About the company

Sanofi was incorporated in 1956 with the name of Hoechst Fedco Pharma Pvt. Ltd. Sanofi is a subsidiary company of MNC pharma giant, Sanofi SA, based in France. In India, the group operates through three main companies - Sanofi India, Shantha Biotechnics through Sanofi Pasteur (the R&D and vaccine business unit), and Sanofi Genzyme, which provides diagnostics and testing services. Of all the three group companies, Sanofi is the largest subsidiary of Sanofi SA and is one of the leading pharma companies in India present in multiple therapies.

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Disclaimer

The above stock was picked from the brokerage report of Sharekhan. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.