Sun Pharma's Valia bets on Ranbaxy, picks 1.4%

Stake acquired by Silverstreet Developers is estimated to be valued at Rs 280-300 crore

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At a time when many are closely watching the Ranbaxy Laboratories scrip, Silverstreet Developers, a limited liability partnership firm with Sun Pharmaceuticals’ Sudhir V Valia as one of the partners, has picked up a 1.41 per cent stake in the Indian generic arm of Japanese drug maker Daiichi Sankyo.

The holding is viewed as minimal but the move created a buzz on the Street because of its valuation and anticipation thatthe Ranbaxy stock could  bring fortunes for many going forward, if the company secures pending approvals in the US.

According to market analysts, Silverstreet Developers has acquired the stake in Ranbaxy over the past two or three months. Based on Ranbaxy’s closing price of Rs 474.10 on Thursday and the current market cap of Rs 20,089 crore, the stake acquired by Silverstreet is estimated to be valued at Rs 280-300 crore.

Although it would not allow the investment firm any prominent visibility in Ranbaxy, it is being observed because of Valia’s interest.

“Ranbaxy is currently a lottery stock. The firm has a few product approvals pending in the US. If it manages those, the stock will bounce back giving its investors huge profits. On the other hand, if the company falters further, it will be a major loss. Given this situation, an interest from an investor such as Valia may a indicate better future for Ranbaxy,” said an industry source.

Ranbaxy has been awaiting the US drug regulator’s final nod for its generic versions of Novartis AG’s hypertension drug Diovan. Recent enforcements by the US Food and Drug Administration on Ranbaxy’s Mohali facility have also raised fears of a possible delay in the launch of other new products including a generic version of Roche's anti-viral Valcyte and AstraZeneca Plc’s blockbuster heartburn and ulcer pill Nexium in the US, analysts said.

Valia, who is also the brother-in-law of Dilip S Shanghvi, managing director of Sun Pharma, had acquired a 26 per cent stake in a joint venture with Norwegian telecom giant Telenor through his firm,  Lakshdeep Investments & Finance in 2012. Valia has been an independent investor in many mid-sized Indian companies.