Sun Pharma stock falls 14.95% on 2016 sales expectations

Shares of drug firm Sun Pharmaceutical Industries slumped 16 per cent in the morning trade on Bombay Stock Exchange (BSE) after the drugmaker on Monday said it expects 2016 sales to be flat.

India's largest drugmaker had on Monday said its revenue in fiscal 2016 would be flat as it struggles to fix manufacturing problems at Ranbaxy Laboratories, which it bought last year. The company might also decide to shed some low-margin businesses that it believes don't hold long-term value.

Shares of Sun Pharma slumped 16 per cent in early trade on Tuesday before cutting some losses to trade 11.89 per cent lower at Rs 834.25 at 10:31 am.

Analysts say results warning can cut FY16 consensus earnings estimates by 8-10 per cent as company struggles to fix manufacturing problems at Ranbaxy.

"We have evaluated two to three businesses and we are thinking which one to divest," Sun Pharma founder Dilip Shanghvi told analysts on a conference call. The efforts are part of Sun Pharma's integration of Ranbaxy, which it bought for $3.2 billion last year betting to fix manufacturing issues which have led Ranbaxy's India plants to be barred from exporting to its largest market, the United States.

The plans will help Sun Pharma "revert to a more sustainable growth trajectory" after fiscal 2016, the drug maker said in a statement.

Remedial actions at Ranbaxy plants are "on track," Sun Pharma said, adding it would "try to expedite the resolution for at least one of these facilities." It did not give a timeline.

The stock closed 14.95 per cent lower on the BSE. 

(Reuters)