Why Sun Pharma is Top Nifty Loser Today

Sun Pharmaceutical shares fell nearly 10 per cent on Monday following the drugmaker's disappointing quarterly results in the March quarter. Sun Pharma, India's largest drugmaker by sales, had posted its Q4 numbers post market hours on Friday. Sun Pharma was the top Nifty loser in morning trade today.

Here are the reasons for the selloff in Sun Pharma:

1) Sun Pharma's Q4 net profit of Rs 888 was below Reuters estimate of Rs 1,609 crore and lower than Rs 1,587 crore number the company posted in the corresponding quarter last year.

2) Sun Pharma said profits came under pressure because of costs related to integrating Ranbaxy, which the company had acquired from Japan's Daiichi Sankyo in April 2014. Sun Pharma faces an uphill task in turning around Ranbaxy's business, which has been posting losses for months as all of its manufacturing plants in India are barred from exporting to the US due to quality control issues, analysts say.

3) Q4 profit was also hurt by supply constraints related to resolving issues raised by the US Food and Drug Administration at its Halol manufacturing plant in Gujarat, Sun Pharma said.

4) Sun Pharma declined to give a guidance for fiscal 2016, citing "complexities involved in merging two large companies". This is the first time in many years that Sun Pharma has not given guidance, analysts said.

5) Many brokerages cut their fiscal 2016 earnings per share (EPS) estimate on Sun Pharma post weak quarterly earnings. Domestic brokerage Motilal Oswal was the most aggressive as it slashed its FY16 EPS estimate by 18 per cent.

Sun Pharma shares ended 9 per cent lower at Rs 878.95 apiece. It was the top looser among the Nifty-50 basket of stocks
(With inputs from Reuters)