For a company that was on a comeback trail after initiating several turnaround measures, the last two days have proved to be tumultuous for drug company Wockhardt, which lost about one-fourth of its market cap.
Following the import alert on May 22, issued by the US Food and Drug Administration (USFDA) for not meeting good manufacturing practices at its manufacturing unit in Waluj near Aurangabad, Maharashtra, the Mumbai-based pharma company’s scrip tumbled by over 18 per cent intra-day, but recovered to close at Rs 1,260, down 53.80 or 4.09 per cent on the NSE, after having slid by 20 per cent on Thursday.
The impact of the import alert in revenue terms is estimated to be around $100 million on an annualised basis, according to the company. Though the management maintained that it would be able to restore the hit within six to nine months by shifting production to other facilities, the market seemed far from convinced, with investors exiting the stock for the second consecutive day on Friday.
Foreign brokerage firms Citigroup Global Markets and Macquarie have cut their target price on the stock, but maintained their ‘outperform’ rating.
Ranjit Kapadia, Senior VP, at broking firm Centrum Capital, said: “Uncertainty has been built in the stock and till it is resolved, the stock will not see an upside…We see a further downside of 5-10 per cent in the coming days if the overall market also falls,” he said.
manisha.jha@thehindu.co.in