Sun Pharma shares plunged over 4% on Monday, as investors heavily offloaded the company's stocks after the US drug regulator issues a warning letter for its Halol manufacturing unit.

Share prices of India's biggest drug-maker fell Rs 36 or 4.5% to end Rs 745.45 on the Bombay Stock Exchange, as concerns over its sales in the US weighed on the stock.

On Saturday, the pharma giant had the US drug regulator issued a warning letter to the company regarding violation of manufacturing norms at its Halol plant in Gujarat. The US Food and Drug Administration (USFDA) had conducted inspections at the Sun Pharma's Halol facility in September 2014.

The US drug watchdog has withheld approvals for products manufactured at the facility since the inspection in September 2014, which has affected Sun Pharma's sales in its largest market, the US.

Sun Pharma said that it would request for a re-inspection by USFDA after fulfilling its "remediation commitments."

But analysts remain mixed over the outlook for the company's stock, with most of them still staying bullish waiting to see more details on the warning letter.

The brokerage Phillip Capital recommends investors to buy the stock on dips saying that "the issue may have more sentimental impact."

"It has enough time to go for site transfer for other drugs," Phillip Capital said.

Likewise, CLSA also advises investors to look for "any weakness" in Sun Pharma as a chance to buy its shares.

But Morgan Stanley and HSBC have downgraded the stock outlook. While Morgan Stanley revised downwards its outlook to 'equalweight' and slashed the price target to Rs 762 from Rs 981 per share, HSBC downgraded it to 'hold' and cut the price target to Rs 735 against an earlier Rs 932.

"Halol warning letter could extend timeline for recovery in US biz and with two large companies Sun Pharma & Dr Reddy's under FDA warning there is potential for further sector de-rating," quoted HSBC, as saying.

On the other hand, Nomura and Credit Suisse maintain a 'neutral' outlook for the Sun Pharma stocks.