Shares of Cipla fell sharply in Monday’s trade after the drug major’s Pithampur manufacturing facility received eight inspectional observations in Form 483 from the United States Food and Drug Administration (USFDA). The stock tanked 6.79 per cent to hit a day low of Rs 956.20 over a previous close of Rs 1,025.80.
“We hereby notify that the USFDA conducted a current Good Manufacturing Practices (cGMP) inspection at our Pithampur manufacturing facility from February 6-17, 2023. On conclusion of the inspection, the Company has received 8 inspectional observations in Form 483,” Cipla stated in an exchange filing. The company also said it would work closely with the USFDA and address these comprehensively within the stipulated time.
According to USFDA’s website, an FDA Form 483 is issued to a firm’s management at the conclusion of an inspection when an investigator has observed any conditions that in their judgment may constitute violations of the Food Drug and Cosmetic Act and related Acts.
On the earnings front, Cipla reported a 7 per cent increase in its consolidated net profit at Rs 808 crore in the third quarter ended December 2022 (Q3 FY23).
“Despite average Q3 FY23 results, Cipla stock price has become oversold on the daily charts due to today’s steep fall with next support seen at Rs 940. Investors should buy only if a daily close is above Rs 980. Targets will be Rs 1,043-1,084 in the coming days,” said AR Ramachandran from Tips2trades.
The stock was last seen trading lower than 5-day, 20-, 50-, 100- and 200-day moving averages. The counter’s 14-day relative strength index (RSI) came at 28.40. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company’s stock has a price-to-equity (P/E) ratio of 29.46.
Cipla has an average target price of Rs 1,236.78, Trendlyne data showed, suggesting a potential upside of 28.19 per cent. The scrip has a one-year beta of 0.46, indicating low volatility.
Around 1.71 lakh shares changed hands today on BSE, which was more than eight times compared to Cipla’s two-week average volume of 21,000 shares. Turnover on the counter stood at Rs 16.59 crore, commanding a market capitalisation (m-cap) of Rs 77,905.53 crore. There were 57,150 buy orders against sell orders of 50,843 shares.
Considering today’s low price of Rs 956.20, Cipla traded 19.32 per cent lower from its 52-week high of Rs 1,185.20, hit on November 1 last year. That said, the stock has moved 8.66 per cent higher from its one-year low level of Rs 880, touched on February 24, 2022.
Meanwhile, Indian equity benchmarks slipped into the red in afternoon deals as losses in banks and financials countered gains in technology and automobile shares. The 30-share BSE Sensex pack fell 74 points or 0.12 per cent to trade at 60,928; while the broader NSE Nifty index moved 38 points or 0.21 per cent lower to trade at 17,907.
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