Sanofi India is a part of the MNC group Sanofi and has had a significant presence India for many decades now. Here are some of the reasons why the Sanofi India stock is a great bet at the current levels.
Debt free, strong cash reserves and healthy dividends
Recently, the company declared a final dividend and a special dividend, taking both the amounts to Rs 490 per share. Sanofi India has a consistent track record of declaring healthy dividends. For the calendar year ending Dec 31, 2021 the yield is 6.72%. Even in the previous years the company has declared special and final dividends, where the dividend yields itself work to around 5% or thereabouts.
Management commentary optimistic
According to a recent Sharekhan report, Sanofi India Limited (Sanofi) had hosted an investors' call to discuss business updates and the commentary was positive, pointing towards a healthy growth outlook for the company.
"The company's focus on core areas of - diabetology (insulin products), cardiology, and brand building in consumer products is likely to propel growth ahead. While divestment of the slowmoving business - Nutraceuticals and Soframycin and Sofradex point towards a linear cost structure, leading to operating profit margin (OPM) expansion. Also it would enable higher focus on core areas of growth. Therefore, earnings are expected to stage a 10% CAGR over CY2021-CY2023E," Sharekhan said in that report.
Price target of Rs 9250
In its latest report on Sanofi India, Sharekhan has set a price target of Rs 9250 on the stock. Sanofi has identified three areas for growth, which include accelerating growth in the diabetology portfolio, fortifying presence in established/top brands, and focus on building brands in consumer products. In addition to the above, expected strong growth in insulin products and portfolio expansion in cardiology would be key growth drivers.
Leveraging the digital platform
"Emphasis on leveraging the digital platform and divestment of the slowmoving business are expected to drive OPM expansion, leading to double-digit 10% PAT CAGR over the next two years. At the current market price, the stock trades at 26.9x/24.1x, respectively, its CY2022E/ CY2023E estimates. Considering its high-growth visibility from chronics, strong and debt-free balance sheet, sturdy dividends, and healthy cash position, premium valuations are expected to sustain. We retain our Buy recommendation on the stock with unchanged price target of Rs. 9,250," Sharekhan has said.