Zydus Life stock drops 6% after acquisition of 50% stake in Sterling Biotech; Citi maintains 'Sell'

The downtrend was seen after the company announced acquisition of 50 percent stake in Sterling Biotech Ltd. from existing owner Perfect Day for Rs 550 crore.

Zydus Lifesciences share price traded under pressure in Monday's trading session with losses as high as 6 percent after the company announced buying a 50 percent stake in Sterling Biotech.

The scrip hit the day's low of Rs 1108.35 per share on the NSE, down 5.97 percent from its previous close.

The stock had opened with a loss of 4.13 percent today and has been losing for the last two trading sessions, falling 7.41 percent in the period.

The downtrend was seen after the company announced acquisition of 50 percent stake in Sterling Biotech Ltd. from existing owner Perfect Day for Rs 550 crore.

The analysts at the brokerage house Citi have maintained a sell rating on the counter of Zydus Life, recommending a share price target of Rs 890 per share from its current levels.

The notable decrease in the scrip can also be ascribed to heightened competition from new competitors. "Impact of competition in this product should also reflect in the valuations in our view," Citi report added.

Meanwhile, Nomura maintained its 'Neutral' rating on the counter with a share price target of Rs 1,020 per share.

It said in its report that Sterling Biotech is one of the large manufacturers of pharmaceutical gelatin, di-calcium phosphate (DCP) and APIs including lovastatin, doxorubicin, epirubicin, and daunorubicin.

At one point in 2012, SBL was one of the largest global producers of gelatin, and was among the top four players with a 6.5% global market share, it added.

At around 12:30 PM, the counter quoted at Rs 1,122.15 apiece on the NSE, down 4.80 percent.

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