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Lupin Shares Tank 17% On USFDA's Warning Letter, Brokerages Give 'Buy' Rating

The Lupin shares crashed over 17% to trade at Rs 851 soon after it announced, in a stock filing, that it has received a warning letter issued by the USFDA pertaining to its plants located in Goa and Indore (Pithampur Unit II).

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Lupin Shares Tank 17% On USFDA's Warning Letter, Brokerages Give 'Buy' Rating

Lupin shares crashed over 17% on Tuesday


Mumbai: The Lupin Ltd lost nearly 17% in the market cap on Tuesday soon after the pharmaceuticals company announced, in a stock filing, that it has received a warning letter on Monday issued by the USFDA (United States Food and Drug Administration) pertaining to its two manufacturing facilities located in Goa and Indore (Pithampur Unit II).

Lupin shares closed at Rs 860.50, 16.84% lower than the previous session's closing on BSE. On NSE, the shares closed at trading at Rs 860.10, 16.86% lower than the previous day's closing.

"We had received three form 483 observations in Goa on April 7 and six Form 483 observations in Pithampur (unit II) on May 19. We had responded to all the observations," the company wrote in the stock filing.

The company, however, tried to calm the tempers by saying, "There will be no disruption of existing product supplies from either of these locations, there will likely be a delay of new product approvals from these two facilities."

"Both the plants together contribute more than half of the drug maker's US sales and approximately 20% of its total sales. Thus any long term sever outcome; which would lead to impact on future earnings of the company, will have impact on shareholder wealth. At current price of Rs 861, the stock trades at 16.3 times fiscal 2018 Earnings, which leaves room for the appreciation in the stock, and thus Tuesday's fall can be used to buy into the stock. We currently maintain our Buy rating with a price target of Rs 1,300," says Sarabjit Kour Nangra, VP Research, Pharma, Angel Broking.

The stock had closed at Rs 1,034.70 on Monday and opened on Rs 1,041 on BSE on Tuesday. It hovered in the range of Rs 1,044 and Rs 851 during the day.The BSE healthcare index falls 3.07% on BSE to trade at 14101.43 points, while the Nifty pharma index declines by 3.88% on NSE after Lupin shares came crashing. 



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