Stock prices of India's biggest drug-maker Sun Pharma fell sharply on Tuesday as the company said its profit could come under pressure due to costs involved in merging of Ranbaxy Laboratories.
Share prices of Sun Pharma fell by ₹143.30 or 15.14% to close at ₹803.50 on the Bombay Stock Exchange (BSE).
On Monday, the Mumbai-based multi-national pharmaceutical company said its revenue growth will remain flat in the current fiscal year owing to factors including expenditure on integrating Ranbaxy into the company, extended impact of "remediation measures" at Halol and sale of low-margin businesses.
However, brokerages remain mixed over the outlook for stock prices of Sun Pharma despite a warning for a slump in profit.
"The miss, in our view, is largely due to one-off issues (Halol disruptions and integration costs) and are non-recurring. With business fundamentals remaining intact, our FY17 number sees only marginal downgrade and we retain our buy rating with a target price of Rs 1,100," global brokerage firm Jefferies said in a note to The Economic Times.
Sun Pharma had witnessed a fall in profit by 44% to ₹888 crore during January-March quarter against ₹1,587 crore in the same quarter last year.
"Things seemed to be getting murkier for the company and it is likely to be under stress not only for the current financial year but also FY16-17," BSE & NSE member Dipan Mehta, told moneycontrol.com.
Nevertheless, the management of Sun Pharma remains hopeful of making comeback to a "sustainable growth path" starting from next fiscal year once the hurdles clear off.
The Sun-Ranbaxy merger was expected to be a complicated process, considering the large size of the two companies. Combined sales force of the two firms is nearly 30,000.
"We continue to believe that these issues pressuring near-term earnings do not impact the medium-to-long-term outlook of Sun and hence would look to add on any disproportionate declines," said the Macquarie report.