Sanofi India Demerges Consumer Healthcare; Shares Surge 8%.

The domestic market remained volatile for yet another day amid mixed global cues. US inflation data, along with FII activity kept investors busy, with stock specific approach being the theme of the market in recent times. Meanwhile, one particular stock has witnessed strong buying sentiment post the demerger announcement of its consumer healthcare business.   

Sanofi India is a midsized company, primarily engaged in the manufacturing and sale of pharmaceutical products. The Rs 14,000 crore company develops medicines in therapeutic areas related to cardiovascular diseases, metabolism, CNS and vaccines.   

In its recent exchange notification, the company board has approved the demerger of Sanofi Consumer Healthcare India. Upon completion of the proposed demerger, Sanofi will continue to hold 60.40% stake and Sanofi India shareholders will receive 1:1 SCHIL equity share of Rs 10 each, for each share owned. The revenue from the healthcare business stood at Rs 730 crore, representing about 28% of Sanofi India’s total revenue.  

The primary reason for the demerger was to “unlock and maximize” its consumer healthcare business. The proposed demerger will facilitate independent growth plans and also enable more management control.   

Sanofi chairman Aditya Narayan said that “The Proposed Demerger will help both entities build a sustainable growth model. Today, Sanofi is in a strengthened position in India, allowing us to deliver better value to our shareholders and other stakeholders.”  

Meanwhile, the company missed analysts ‘Q4 expectations as it reported a 20% decline YoY in net profits to Rs 190.40 crore. The revenue stood at Rs 736.50 crore, a modest rise of 4.2% YoY from Rs 707 crore in March 2022. Interestingly, the EBITDA margin rose 370 basis points to 31.2%.  

On Thursday, the shares of SANOFI soared over 8% backed by strong volumes. The technical parameters should renew buying interest in the stock. Traders should keep a close watch on this stock for upcoming trading sessions.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations.