Stocks

HSBC Global cuts stake in Aurobindo Pharma

| Updated on: Mar 08, 2011

Offloading of stake assumes significance as the US Food and Drug Administration (USFDA) had recently imposed an import alert for detention of products from Unit IV of Aurobindo's manufacturing facility near Hyderabad.

HSBC Global Investment Funds (Mauritius) Ltd has offloaded 0.91 per cent of its stake in Aurobindo Pharma Ltd in open market sales.

With this, HSBC Global Investment Funds (Mauritius) Ltd's stake in the Hyderabad-based company had come down to 2.50 per cent from 3.41 per cent, the Bombay Stock Exchange was informed on Tuesday.

Significance

The sale was concluded on February 24.

The offloading of stake assumes significance as the US Food and Drug Administration (USFDA) had recently imposed an import alert for detention of products from Unit IV of Aurobindo's manufacturing facility near Hyderabad. In reaction to that, Goldman Sachs in its report said: “We remove Aurobindo Pharma from the Conviction Buy and Buy lists and move it to Neutral following its announcement that the USFDA has imposed an import alert for detention of products from its Cephalosporin facility (Unit VI) located in India.”

The company had earlier said that it would suffer a revenue loss of about $2 million a month as long as the issue remains unresolved.

Exudes confidence

“Aurobiondo Pharma is confident of completing remedial issues within 3-4 months (could take longer for the FDA to validate the same) and also indicated that its deals with Pfizer and Astra are unaffected. However, we expect the issue to weigh on valuations till we see tangible signs of the same or the issue is resolved,” said a Citi note.

As of December 2010, Promoter holding in Aurobindo Pharma stood at 54.4 per cent, of which 18.84 per cent was pledged with financial institutions.

FIIs' holding stood at 26.37 per cent, which includes Merrill Lynch. LIC was holding 2.25 per cent, while retail investors' stake stood at about 6 per cent.

Aurobindo Pharma's scrip was up 3.18 per cent on BSE on Tuesday to end at Rs 180.25.

Published on March 08, 2011

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