Why Sanofi India Share Price is Falling

2021 was an eventful year in the history of Indian share markets. We saw record high levels for Sensex and Nifty as easy money flowed into Indian markets. A flurry of IPOs and an unprecedented addition of demat accounts, added to the momentum.

The pharma sector was in full swing prior to the full-fledged recovery. The best pharma stocks stood out and delivered in a difficult Covid-19 period. Increased demand of medicines due to the pandemic, and/or vaccine development were driving up the pharma stocks.

However, as Covid cases eased in 2022 investors took note that the high growth seen in the past year would not be visible in all companies' earnings going forward.

Resultantly, the pharma sector saw a sharp fall in 2022. Almost all pharma stocks are still impacted by the market correction.

Gland Pharma share price is falling while Lupin share price has also corrected.

We even covered detailed editorials on why shares of pharma companies are falling. You can check out the reason for the fall in Laurus Labs share price, the fall in Lupin share price, and the fall in Biocon's share price.

Another name on the list of falling pharma stocks is Sanofi India. Sanofi India's share price is down 31% on a YoY basis.

A fundamentally strong stock is trading near its 52-week low.

Read on to find out what triggers are driving the fall in Sanofi India shares.

Poor quarterly results

For the quarter that ended 30 June 2022, Sanofi India's total revenue stood at Rs 7,150 m. The revenues fell 9% compared to the last quarter.

However, profits saw a massive fall. Net profit for the said quarter came in at Rs 1,204 m, which is 48% lower compared to the previous year's profit.

Q4 of the financial year 2022 was fantastic for Sanofi India. Hence, the decline in profits hurt investor sentiment and the share price declined.

Sanofi India Quarterly Results

Particulars (Rs in m)	Jun-22	Mar-22	Dec-21	Sep-21	Jun-21
Turnover	7,150	7,314	7,042	7,692	8,062
Operating Profit	1,768	3,370	1,435	7,027	2,642
Profit after tax	1,204	2,384	904	5,298	1,783
Net profit margin (%)	17.2	33.7	13.1	70.2	22.6
Diluted EPS	52.3	103.5	39.3	230	77.4

Data Source: Ace Equity

On 21 October 2022, Sanofi India announced it will hold a board meeting on 3 November 2022 to declare its quarterly results. The market expects a further fall in revenues this quarter.

The stock could be falling in anticipation of its quarterly results.

Another factor is that in September 2022, drugs manufactured by Sanofi India were included in the updated national list of essential medicines (NLEM). The drugs in the NLEM are scheduled drugs that are under price control by the central government.

Owing to this, Sanofi India's revenue projections do not look good.

Continuous Selling by FIIs

Interest rates are rising in developed markets like the USA. This makes the emerging markets less attractive for FIIs because the risk-free rate of return reduces.

Hence FIIs sell their holdings in companies operating in emerging markets like India to return to the safety of dollars. The same has happened with Sanofi India.

FIIs have been divesting their stake in Sanofi since June 2021. FII stake stood at 11.5% in the quarter ending March 2021. The stake was reduced to 8.7% by the end of the June 2022 quarter.

Apart from FIIs, even mutual funds sold some shares of Sanofi India in the June 2022 quarter.

For more details, check out Sanofi India's latest shareholding pattern.

Investment Takeaway

Sanofi India's short-term future may look uncertain because of the headwinds it faces currently. But overall, Sanofi India is a fundamentally strong stock.

Sanofi India has aligned itself with India's healthcare needs by building expertise, capability and capacity. It has done so with continued investments, strategic partnerships, and a shared commitment to patients.

That apart, Sanofi India's dividend payout has grown consistently over the years.

Sanofi India Dividend Payout History

Particulars (Rs)	2018	2019	2020	2021
Dividend Payout	84	349	365	490
Dividend Yield	1.4	5	5.2	6.4

Data Source: Ace Equity

For this year, the company has announced a special dividend of Rs 193. The interim dividend and final dividend if any, is yet to be declared.

Sanofi India has also outperformed its peers. It has high ROE and low PE ratio.

Peer Comparison

Company	Revenue (Rs in m)	Profit	Operating Profit Margin	ROE (%)	P/B	P/E	Market Cap
Sanofi India Ltd	29,560	9,444*	44.80%	46.6	6.8	14.8	1,53,720
Pfizer Ltd	26,110	6,125	23.40%	34.4	6.6	31.1	1,92,070
Alkem Lab Ltd	88,300	15,412	22.70%	17.6	4.5	25.2	3,87,280
Abbott India Ltd	49,192	7,987	23.60%	28.3	14.9	52.8	4,19,140
Biocon Ltd	17,382	8,61	14.30%	1	4.9	463.1	393,60

Data Source: Ace Equity

About Sanofi India

Sanofi India previously known as Aventis Pharma is among the leading multinational companies in the Indian Pharmaceutical Market.

It offers a wide array of medicines for therapy areas such as Diabetes Cardiology Thrombosis Central Nervous System and Antihistamines.

The products manufactured by the company are distributed in India and exported to many developed as well as developing countries including Germany, Australia, UK, Russia, and Italy.

To know more about the company, check out Sanofi's latest news and analysis.

Also take a look at Sanofi's financial factsheet and its latest quarterly results.

You can also compare Sanofi with its peers:

Sanofi vs Abbott India

Sanofi vs AstraZeneca Pharma

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...