Shares of Sun Pharmaceutical Industries fell 6.75 percent in early trade after the US health regulator raised red flat on company's Halol facility, but the stock gradually recouped those losses to trade volatile.
It was trading at Rs 339.30, up Rs 1.15 or 0.34 percent after hitting a day's high of Rs 341.90 and low of Rs 315.3. However, its subsidiary Sun Pharma Advanced Research Company was down Rs 1.95 or 2.06 percent at Rs 92.50.
The pharma company in its BSE filing on March 29 said it had received a communication from the US Food and Drug Administration (USFDA) indicating that the Halol facility has been classified as 'Official Action Indicated' (OAI).
The OAI classification implies interalia that the USFDA may withhold approval of any pending product applications or supplements filed from this facility till the outstanding observations are resolved.
The company said it continued to manufacture and distribute existing products for the US market, thereby not likely to have any adverse impact on current business from the facility.
The USFDA had inspected Halol (Gujarat) facility during December 3-13 and issued Form 483 with eight observations.
"Sun Pharma continues to cooperate with the USFDA and will undertake all necessary steps to resolve these issues and to ensure that the regulator is completely satisfied with the company’s remedial action," the company said.
Hence, the global brokerage house CLSA cut its FY21-22 EPS estimates by 4 percent. "No approvals from Halol led us to cut our US sales estimate by 3 percent."
Despite this, the research house found risk-reward attractive as valuations largely reflected higher security and growth visibility of India business.
Hence, CLSA reiterated buy rating on the stock, though it slashed price target Rs 520 (from Rs 540 per share) on expected lower earnings.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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