IPCA Laboratories Shares Slide To Nearly Three-Year Low After Unichem Deal

Shares of IPCA Laboratories Ltd. fell to nearly three-year low, while those of Unichem Laboratories Ltd. gained after the former agreed to purchase a third of Unichem's overall shareholding.

The company has entered into a definitive share purchase agreement for the acquisition of 2.35 crore shares from one of its promoter shareholders at a price of Rs 440 apiece for a total cash consideration of Rs 1,034.1 crore, it said in an exchange filing on Monday.

The acquisition is subject to approval from the Competition Commission of India. The business and product ranges of IPCA Labs and Unichem Labs complement each other's business and product ranges.

The company will also be making an open offer to acquire up to 26% of the shares of Unichem Labs at Rs 440 apiece, aggregating to Rs 805.4 crore, according to Securities and Exchange Board of India acquisition regulations.

Shares of IPCA Laboratories fell 7.75% to Rs 762.45 apiece as of 09:55 a.m., compared to a 0.01% decline in the benchmark NSE Nifty 50. The stock fell as much as 9.13% intraday, the most in over eight months intraday since August 12, 2022. The scrip fell to nearly three-year low since June 4, 2020, to Rs 751 apiece on Tuesday.

The total traded volume so far in the day stood at 61.1 times its 30-day average. The relative strength index was 31.2.

Out of the 23 analysts tracking the company, nine maintain a 'buy' rating, 10 recommend a 'hold' and four suggest a 'sell' on the stock, according to Bloomberg data. The average 12-month consensus price target implies an upside of 20.8%.

Shares of Unichem Laboratories Ltd. rose 1.02% to Rs 392 apiece as of 09:55 a.m., compared to a 0.01% decline in the benchmark, NSE Nifty 50. The stock gained as much as 2.04% intraday.

The total traded volume so far in the day stood at 23.4 times its 30-day average. The relative strength index was at 73, implying that the stock may be overbought.