Wockhardt Gets Import Alert For Ankleshwar Plant, Shares Slump 14%

Wockhardt shares slumped 14 per cent on Monday, following the US Food and Drug Administration's import ban on its Ankleshwar plant for non-compliance with good manufacturing norms.

The Ankleshwar plant, which manufactures bulk drugs for US and Europe, is Wockhardt's third plant to receive an import ban from the US regulator. According to analysts, Wockhardt's Ankleshwar plant accounts for 10-12 per cent of the company's US sales and 2-3 per cent of overall sales.

The drugmaker's plants at Chikalthana and Waluj have been banned from exporting drugs to the US by the US health regulator earlier. The Chikalthana plant at Aurangabad in Maharashtra was banned for exports in November 2013. Wockhardt's Waluj facility, which makes injectables and solid dosages, was banned from exporting to US in May.

The ban on Ankleshwar plant will make it difficult for Wockhardt to revive its US business, whose share in the total sales dropped to 22 per cent in FY16 from 24 per cent a year ago.

SV Prasad of Chime Consulting advised investors to stay away from Wockhardt. The volatility in Wockhardt is much higher than most of the other comparable names, he said.

"I would stick to a higher priced stock with visibility of earnings and where these hygiene issues are not there, rather than try to play a 3-4 price earnings ratio hike happening in a stock like Wockhardt," Mr Prasad added.

Sanjeev Bhasin on brokerage IIFL said the pharma sector has become too volatile for small investors.

"Wockhardt is the perfect example. It is a complete avoid for us," he said.

Dr Reddy's and Biocon are IIFL's top pick in the pharma sector.

Wockhardt shares closed 9.80 per cent lower at Rs 915, underperforming the broader Nifty that ended with 0.3 per cent gains.