BENGALURU (Reuters) -Shares of Ipca Laboratories fell as much as 9.1% to a near three-year low on Tuesday, after it agreed to buy a 33.38% stake in Unichem Laboratories for up to 10.34 billion rupees ($126.3 million).
Ipca, which makes paracetamol tablets under the brand name Pacimol, will also launch an open offer to Unichem’s shareholders to buy an additional 26% stake for 8.05 billion rupees, according to a regulatory filing on Monday.
The stock posted its biggest intraday loss in over eight months before easing to trade down about 7.36% to 765.70 rupees, as of 10:10 a.m.
IST. It was the top loser in India’s Nifty pharma index, which is down 0.46%.
“We believe the acquisition is expensive given increased competition in the U.S. generics oral solids space, rising regulatory risks, and strong efforts needed to turnaround Unichem,” Motilal Oswal said in a note.
The brokerage, which retains its “buy” rating on the stock, said it awaits better clarity on measures to be implemented by Ipca to “not only aid U.S. sales but also improve margins of Unichem business over the stipulated time.”
The average rating of 21 analysts covering the stock is “hold” and their median target price is 911 rupees, according to Refinitiv data.
($1 = 81.8700 Indian rupees)
(Reporting by Ashish Chandra in Bengaluru; Editing by Sonia Cheema)
