Shares of Sun Pharmaceutical Industries crashed 21.3 per cent on Monday in intra-day deals to a new year-low of ₹350.4 on the BSE but recovered a bit to end the at ₹396.85, down 9.4 per cent from Friday’s close.

Drop in the shares prices of prominent peers such as Glenmark and Aurobindo pushed the BSE Healthcare index down by 3.6 per cent.

Of the 2.4 crore shares traded on the NSE, only 68.44 lakh or 28.4 per cent were presented for delivery, signalling high day-trading. However, the reason behind the panic selling was not known immediately. In fact, the drugmaker on Monday said that Raksha Valia, wife of Sudhir Valia, Sun Pharma’s executive director and brother-in-law of founder Dilip Shanghvi, revoked or released pledged shares on May 7.

Nearly 19.3 lakh shares held by Valia and pledged with Kotak Mahindra Mutual Fund were released, according to the filing.

She held 1.41 per cent in Sun Pharma. Her pledged holding fell from 99.87 per cent as of March to 94 per cent after the release of pledged shares.

Similarly, on May 6, the company said Sanghi Finance had released 43.75 lakh shares of pledged shares on April 25 in respect of commercial papers; 21 lakh shares and 15 shares on April 26 by lender Julius Baer Capital (India) as a security for loan availed by the third party.

Under pressure

Sun Pharma’s stock has dropped 7.85 per cent so far this year compared with a 2.83 per cent rise in the BSE Sensex. The stock has been under pressure, due to corporate governance, especially loans to a third party and the delayed disclosure of the promoter’s link to a distributor. According to HDFC Securities, the key watchouts for the company are: specialty product pipeline and R&D spend; updates on approvals and launches; and clarity on SEBI investigation related to corporate governance issues.

The company is expected to grow at nearly 6 per cent y-o-y affected by a higher US-base and inventory adjustment in India business, said HDFC Securities in its Q4 preview. “Sequentially, we see a 4 per cent drop,” it added. The broking house further said it expects EBITDA margin to contract due to sticky spend on the US, specialty business and a one-time impact on account of lower India sales.

Th board of Sun Pharma is scheduled to meet on May 28 to consider and approve audited standalone and consolidated financial results of the company for the fourth quarter and year ended March 31, 2019.

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