ICICI Direct: Sanofi India’s Margins Upbeat Despite Covid-19 Disturbances
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ICICI Direct Report
Sanofi India Ltd.’s Q2 CY20 revenues de-grew 5% YoY to Rs 710 crore mainly due to divesture of few products to Zentiva and Covid-19 impact on some therapies. Adjusting for Zentiva, continuing operations grew approximately 1% YoY.
Ebitda margins improved 384 basis points YoY to 24.9% due to lower other expenditure, better gross margins. Subsequently, Ebitda grew 12.3% YoY to Rs 177 crore.
Adjusted profit after tax grew 38.8% YoY to Rs 135 crore. Delta vis-a-vis Ebitda was due to lower depreciation, tax rate and higher other income.
Sanofi’s top five brands (Lantus, Combiflam, Allegra, Amaryl and Clexane) together posted revenue compound annual growth rate of 12.4% (moving annual total June 2016-2020), leading their combined sales contribution to grow from 35% in June 2016 to nearly 42% in June 2020.
Note that four core brands (Lantus, Amaryl, Clexane, Avil) are under price control. We expect future launches from its global staple along with brand extensions and access to innovative molecules from global parent like the recently launched anti-diabetic Toujeo to drive growth.
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