Mumbai: Shares of Sun Pharmaceuticals Industries Ltd on Tuesday fell 8% to hit a near six-month low after its overseas arm Taro Pharmaceuticals Industries Ltd reported weak earnings in the March quarter.
Intraday, the stock hit a low of Rs589.20, a level last seen on 9 November 2016. At 10:33am, it was trading at Rs600 apiece, down 6.3% from its previous close, while India’s benchmark Sensex index fell 0.6% to 30,396.91 points. Sun Pharma stock declined in six out of the last seven trading sessions registering a fall of 8.24% in this period. So far this year, it has fallen 4.3%.
The decline in Taro’s earnings was due to increasing competitive intensity and pricing pressure, according to Edelweiss Securities report.
Taro reported 26% decline in its revenue from a year ago and 11% fall quarter-on-quarter (q-o-q) to $196 million. Net profit fell 28% year-on-year, while it was down 41% q-o-q.
Earnings before interest, tax, depreciation and amortization (Ebitda) fell 43% from the same quarter last year and 21% from the previous quarter. Ebitda margin shrunk 1,618 basis points on year.
“As is commonly known, and as we have stated for quite some time, the entire generic sector, including Taro, is facing a challenging period. We continue to see a difficult generic pricing environment, particularly in the US, driven by intensified competition among manufacturers, new entrants to the market, buying consortium pressures, and higher ANDA approval rate from the FDA,” said Abhay Gandhi, Taro’s interim chief executive officer.
Investors are now awaiting Sun Pharma’s earnings, expected on 26 May. According to a Bloomberg poll of 23 analysts, the company is likely to report a net profit of Rs1,506.30 crore and net sales of Rs7,800.50 crore in the March quarter.
Of the analysts covering Sun Pharma stock, 38 have a “buy” rating, six have a “hold” rating, while one has a “sell” rating, shows Bloomberg data.