Sun Pharma records biggest single-day decline; investors lose Rs 34,000 crore

The stock tanked 15% to Rs 805 on the National Stock Exchange.

The Sun Pharmaceutical Industries stock on Tuesday tanked 15 per cent to close at Rs 805.25 on the National Stock Exchange (NSE), its steepest single-day fall on a closing basis. As a result, the drug maker’s market capitalisation (m-cap) fell about Rs 34,000 crore.

In intra-day trade, the stock plunged 16 per cent to Rs 795.25, the lowest since October 2014, after the company said its overall revenue and profit were likely to be hit this financial year (FY16) due to consolidation initiatives post its merger with Ranbaxy.

The company’s M-cap declined by Rs 34,352 crore on Tuesday — from Rs 228,129 crore to Rs 193,777 crore.

On June 26, 2009, the stock had plunged 19 per cent in intra-day trade, though it had closed with a net loss of 12.2 per cent.

Late evening on Monday, Sun Pharma released its FY16 consolidated revenue growth forecast, wherein it stated revenues were likely to be flat or decline on a year-on-year basis. Also, the FY16 estimated profit after tax is also likely to be hit by various integration charges after the Ranbaxy consolidation.

Brokerage houses have cut the company’s FY16 earnings estimates 12-29 per cent and reduced the target price to Rs 700-800. CLICK HERE TO READ FULL REPORT

Reliance Securities, which has maintained a ‘neutral’ rating on Sun Pharma and revised the fair value of the stock from Rs 953 to Rs 913, said, “Sun, currently in the process of streamlining the huge mismatch between the two companies, has guided towards flattish or negative top-line growth.

Besides, the management has also highlighted that profitability will be adversely impacted by the high costs associated with the integration, Halol remediation, divestiture of low-margin business and higher R&D sales pertaining to clinical trials of MK-3222. This confirms our assumption that integration challenges between the two companies will continue to see more pain in the form of one-offs that will follow in FY16E, said the analyst in an event update.