After touching an all-time record low last week, shares of Sun Pharma rose 6% on Tuesday’s trade after the company clarified that it has not extended any loan or guarantees to Suraksha Realty. The company is also rejigging its domestic operations after second whistle-blower complaints of alleged corporate misgovernance at the country’s largest drug manufacturer was reported.
In a statement, the pharmaceutical company said it “would like to dispel all falsehood” spread about its financial dealings with Suraksha Realty.
“The company states unequivocally that it does not have any financial transactions with Suraksha Realty,” the statement said.
Shares of Sun Pharma touched an intra-day high of 6.12% at Rs 422.75 on BSE before closing at Rs 418.05, up 4.95% the previous close.
After witnessing a record low of Rs 375.40 on BSE on Friday after reports of second whistle-blower complaints filed against the company started doing rounds, this is the second straight day gain for Sun Pharma.
The company, in an earlier disclosure made on the stock exchange, had said it has approached the market regulator Securities and Exchange Board of India (Sebi) to investigate the alleged whistle-blower complaint.
The company on Tuesday also said its domestic formulations distributor Aditya Medisales has been replaced with its own subsidiary in the backdrop of the complaint filed against the company. Aditya Medisales, a related party, was its major distributor domestically, which reported a revenue of Rs 8,005 crore in fiscal 2018.
The change will be made effective by the first quarter of 2019-20, post receipt of all requisite regulatory approvals.
However, allegations of misgovernance resulted in foreign portfolio investors (FPIs) reducing their holding in the company in the December quarter. From 16.78% in the September quarter, FPI holding in Sun Pharma stood at 14.88% in the December quarter. Between October 1 and December 31, Sun Pharma stock took a beating as shares fell 31%, while as on date the fall is 33.7%.
According to Nomura, if there are any resignations by the directors or senior executives, it may be perceived as a negative.
According to a market analyst, the management decision to replace Aditya Medisales with its own subsidiary is a positive. However, concerns may remain till the regulator offers its views on the issue related to corporate governance. Reliance Securities in its report said, “Though the management has addressed some of the key issues, we see negative sentiment to remain (re-opening of the SEBI investigation on the alleged insider trading) in the near-term. Any adverse outcome from SEBI’s future action can be a big risk for the stock and vice-versa.”
- Sun Pharma said it “would like to dispel all falsehood” spread about its financial dealings with Suraksha Realty
- Shares of Sun Pharma touched an intra-day high of 6.12% at Rs 422.75 on BSE before closing at Rs 418.05
Powered by dnaindia-rss,catID-2.xml.