Sun Pharma gains 3% post EIR for Halol facility; Morgan Stanley maintains underweight

Share price of Sun Pharmaceutical Industries added 3 percent in the opening trade on Wednesday as company received EIR from USFDA for its Halol facility.

The company has received the EIR (establishment inspection report) from the USFDA for the inspection conducted at its Halol facility (Gujarat, India) during the period February 12-23, 2018.

The agency concluded that the inspection is now closed and the issues contained in the warning letter issued in December 2015 have been addressed, company said in release.

Dilip Shanghvi, Managing Director of Sun Pharma said, “This is an important development for Sun Pharma. We remain committed to following the highest levels of quality and 24x7 cGMP compliance at all our manufacturing facilities globally."

The EIR will allow Sun Pharma to restart supplies from the Halol facility to the US.

Prior to the warning letter, Halol was contributing about USD 400 million in sales, which was nearly 15 percent of the company's total sales. The facility’s contribution later declined to about USD 250 million. US alone has contributed around 40 percent of Sun Pharma overall sales in FY18.

Brokerage: IDFC Securities | Rating: Outperform | Target: Rs 574

IDFC Securities has maintained outperformer rating on Sun Pharma with a target of Rs 574 per share.

According to broking house, the receipt of Halol EIR is major positive development for company's US business. Also, the said EIR underlines that the phase of FDA compliance related challenges is largely behind.

The growth trajectory of speciality portfolio will remain key monitorable and company is clearly best placed amongst large domestic peers, it added.

Brokerage: Morgan Stanley | Rating: Underweight | Target: Rs 448

Morgan Stanley has maintained underweight call on Sun Pharma with a target price of Rs 448 per share.

Halol clearance is on expected lines and new ANDA approvals held back for last three years should commence, said Morgan Stanley.

The company should be able to gradually increase sales for the current portfolio, it added.

At 09:18 hrs Sun Pharmaceutical Industries was quoting at Rs 556.75, up Rs 16.25, or 3.01 percent on the BSE.