Shares of Sun Pharma dips 15% after profit warning triggers downgrades

Shares of India’s largest pharmaceutical company Sun Pharma slumped 15% to Rs 805 on Tuesday—its biggest single-day dropever—after the drugmaker issued a profit warning for fiscal year 2016.
As Sun Pharma continues to struggle for fixing manufacturing problems at Ranbaxy Laboratories,whichit bought last year, brokerage houses downgraded Sun Pharma’s price target and earnings estimates. Trading volumes also jumped multiple time son Tuesday with 29.63 lakh shares exchanging hands on BSE against at wo week average of 1.77 lakh shares.

Sun Pharma stock has dropped about33% so far from its 52-week high made in early April,while investors ’wealth worth about Rs 48,000 crore has been eroded over this period.

The selling pressure in Sun Pharma stock had an adverse impact on other pharma counters as well, the BSE Healthcare Index dropped 5.93% to 16,844. Analysts said Sun management’s lukewarm earnings guidance for this fiscal year could hurt the near term performance of the stock,but investors with long term investment horizon can look at buying the stock at lower levels.



Shares of India’s largest pharmaceutical company Sun Pharma slumped 15% to Rs 805 on Tuesday—its biggest single-day dropever—after the drugmaker issued a profitwarning for fiscal year 2016.

As Sun Pharma continues to struggle for fixing manufacturing problems at Ranbaxy Laboratories,whichit bought last year, brokerage houses downgraded SunPharma’s price targetandearnings estimates. Trading volumesalso jumpedmultiple timeson Tuesdaywith 29.63 lakh shares exchanging hands on BSE against at woweek average of 1.77 lakh shares.

Sun Pharma stockhas dropped about33% so far fromits 52-week highmadein earlyApril,while investors’wealth worthabout `48,000 crore has been eroded over this period. The selling pressure in Sun Pharma stock had an adverse impact on other pharma counters aswell, theBSE Healthcare Index dropped 5.93% to 16,844.Analysts said Sun management’s lukewarm earnings guidance for this fiscal year couldhurt the near term performance of the stock,but investors with long term investment horizon can look atbuying the stockat lower levels.

IIFL: Sun Pharma provided an unexpected flat-to-negative FY16 revenue growth guidance

Jefferies: Our FY16 EPS estimates declines by 25%, we expect most of the issues to be resolved in FY17

SBI Capital: Delayed synergy benefits and regulatory challenges in Ranbaxy are the key risks to the stock

JM Financial: We see potential de-rating of stock given the limited levers for growth in the near-term

Kotak: We continue to see organic revenue growth as a challenge for the company

Reliance Securities: Integration challenges between Sun Pharma and Ranbaxy will continue to see more pain Sun Pharma provided an unexpected flat-to-negative FY16 revenue growth guidance