Sun Pharma falls 5% on reports of USFDA issues observations

In past three months, Sun Pharma had outperformed the market by surging 38% as compared to a 9% rise in the benchmark index till Thursday.

Shares of Sun Pharmaceutical Industries dipped 5% to Rs 641 on the BSE in early morning trade on Friday on profit booking after the media report suggested that the U.S. drug regulator issued six observations on the company’s plant located at Halol for inspections carried out during August 27-31.

Observations in the latest Form 483 point to issues relating to test procedures. Two analysts with an international brokerage, who also had access to the Form 483, indicated that the observations are not critical, and Sun Pharma will be able to resolve these issues soon, the BloombergQuint reported.

The stock has erased some of its early morning losses and trading 3.3% lower at Rs 654 on the BSE. In comparison, the S&P BSE Sensex was down 0.15% at 38,186 points at 10:08 am.

Sun Pharma hit a 52-week high of Rs 679 on the BSE in intra-day trade on Thursday. In past three months, it had outperformed the market by surging 38% as compared to a 9% rise in the benchmark index till Thursday. On June 12, 2018, Sun Pharma had received the Establishment Inspection Report (EIR) from the US FDA for the inspection conducted at its Halol facility (Gujarat, India) during the period February 12-23, 2018.

The brokerage firm Sharekhan maintains ‘Buy’ recommendation on the stock with upward revised price target of Rs 765.

“We have increased our sales estimates owing to factors such as a favourable currency, a healthy growth in domestic business, strong outlook for its US business and operating leverage. The strong track record of Sun Pharma to turn around acquired assets and its ability to maintain growth across key geographies is encouraging,” the brokerage firm said in a note.