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State-run Life Insurance Corporation (LIC) has hiked its stake in the Covid-19 vaccine maker Cadila Healthcare Ltd (Zydus Cadila), taking it beyond 5 per cent from 3.63 per cent in the previous quarter.
During the July–September quarter of the fiscal, LIC bought over 2 crore shares of Cadila Healthcare, taking its holding to 5.68 per cent, according to the latest shareholding disclosed on Wednesday.
This is the second consecutive quarter the public sector insurance major hiked its stake in Cadila. LIC’s holding in Cadila has been increasing progressively since September 2020, from 3.17 per cent to 3.63 per cent in June 2021, and 5.68 per cent in September 2021.
Mutual funds have marginally reduced their holding during the quarter from 5.83 per cent to 4.79 per cent. Foreign portfolio investors holding has also gone down marginally from 4.65 per cent to 4.11 per cent.
Declining stock price
After a phenomenal rally of 52 per cent from ₹441.8 on April 1 to ₹673.70 during the April–June quarter, Cadila stock came under selling pressure during the second quarter, losing by over 14 per cent. The stock hit a high of ₹673.70 on May 12 on the NSE in anticipation of the company’s Covid-19 vaccine.
The stock has lost further to end at ₹549.45, down 2.57 per cent, on the NSE on Wednesday.
Covid vaccine
The company has developed a three-dose Covid-19 vaccine, the first ever needle-free plasmid DNA vaccine. In August this year, the Indian drug regulator had granted emergency use authorisation (EUA) for administration to adolescents and adults, making it the first vaccine for 12–17 years category.
Zydus, however, has not been able to launch the vaccine till now, possibly due to pricing issues for the three-dose regimen.
Market experts believe that Zydus lost a crucial time advantage to roll out India’s first vaccine for adolescents, and may not be able to monetise the first-mover advantage after other vaccine makers flood the market. “While Cadila’s continued delivery on cost optimisation offers comfort on the margin front (guidance of c.80-100 bps improvement), near-term earnings delivery remains contingent on the vaccine opportunity and domestic performance,” said JM Financial in a report.
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