Sanofi India shares clock biggest intraday gain in 7 months on robust bottomline

Shares of Sanofi India rose 5.5 percent on February 27, extending gains to the second session on strong quarterly earnings.

At 01.17pm, shares of the pharma company traded at Rs 5,32.40 on the National Stock Exchange, up 4.84 percent from the previous close. The stock also tested an intraday high of Rs 5,869.90.

One lakh shares changed hands on the exchanges today, significantly higher than the one-month daily traded average volume of 17,000 shares.

The drugmaker’s net profit increased 45 percent on-year as a strong operating performance offset the 2.3 percent decline in revenue. Its EBITDA margin jumped 635 basis points to 24.84 percent on the back of a fall in input costs. One basis point is one-hundredth of a percent.

Brokerage views

Brokerage firm JM Financial Institutional Securities has a positive stance on the company’s new ‘India for India’ growth strategy as unveiled by the new Managing Director, Rodolfo Hrosz.

Under the new plan, the company will focus on core growth pillars namely diabetes, consumer healthcare, end-to-end innovations and go-to-market strategy. JM Financial also believes that Sanofi India’s thrust on reallocation of resources to reduce overlap will gradually drive its operational efficiencies.

Elara Capital also maintains a bullish view on the stock, giving it a ‘buy’ call with a target price of Rs 7,000 which reflects a 26 percent upside potential from Friday’s closing price. The brokerage also feels that valuations for the drugmaker are attractive at current levels.

“The new management has charted out a roadmap to boost growth, but given the high reliance on Lantus (25 percent of India sales), a price cut in this brand will dent in 2023 growth,” Elara Capital wrote in a note.

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