Aurobindo Pharma slumps 6% amid reports of Sarath Reddy’s arrest by ED

Shares of Aurobindo Pharma tumbled over 6 per cent to a low of Rs 506.90 on the BSE in Thursday’s intra-day trade following reports of arrest of its director Sarath Reddy under sections of the Prevention of Money Laundering Act (PMLA) by the Enforcement Directorate (ED).

The ED has arrested Sarath Reddy and another company executive linked to liquor trade in the money laundering investigation being conducted by it into the now scrapped Delhi Excise policy case, official sources said Thursday. READ MORE

According to the company, P. Sarath Chandra Reddy, Whole Time Director / Promoter Group of the Company has been arrested by Enforcement Directorate. The Company is in the process of ascertaining further details and will do further disclosures as appropriate, it said in an exchange filing. READ HERE

At 10:43 AM, the stock traded 5.7 per cent lower at Rs 510.60, with volume of around 1.62 lakh shares so far as against the two-week average traded volume of around 43,000 shares on the BSE. Meanwhile, the BSE benchmark index, the Sensex was down 0.7 per cent at 60,608.

Meanwhile, Aurobindo Pharma has underperformed the market in the past one year. In the last six months, the stock declined 14 per cent, as compared to 11 per cent rally in the S&P BSE Sensex. In past one year, it slipped 26 per cent, as against 0.36 per cent rise in the benchmark index. The stock had hit a 52-week low of Rs 494.75 on September 27, 2022.

Recently, as per the latest Enforcement Report by the US Food and Drug Administration (USFDA), New Jersey-based Aurobindo Pharma USA Inc recalled 9,504 bottles of Quinapril and Hydrochlorothiazide tablets.

The affected lot of the medication, which is used to treat high blood pressure, has been manufactured in India and marketed in the US market by Aurobindo Pharma USA, Inc, the report added.

In a separate statement, USFDA said AuroMedics Pharma LLC, a unit of Aurobindo Pharma, has recalled 11,520 units of Fondaparinux Sodium Injection in the US market. The medication, an anticoagulant, is used in the treatment of deep vein thrombosis. As per the USFDA, the company is recalling the affected units due to it being “Subpotent Drug: Out of specification for assay”.

Aurobindo Pharma is an integrated global pharmaceutical company headquartered in Hyderabad, India. The company develops, manufactures, and commercializes a wide range of generic pharmaceuticals, branded specialty pharmaceuticals and active pharmaceutical ingredients globally in over 150 countries.

The company has 24 manufacturing and packaging facilities that are approved by leading regulatory agencies including USFDA, UK MHRA, EDQM, Japan PMDA, WHO, Health Canada, South Africa MCC, Brazil ANVISA.

Further, the company’s board is scheduled to meet on November 12 (Saturday) to announce earnings for the September quarter.

Tech View

Support: Rs 499.5

A sharp drop on Thursday has give bears an upper hand over Aurobindo Pharma’s stock. With today’s low of Rs 507, the stock has slipped below all the key moving averages (20-day moving average of Rs 531; 50-DMA of Rs 531.4; 100-DMA of Rs 539.5; 200-DMA of Rs 582).

However, the shares are holding above the lower end of the Bollinger Band on the daily chart, placed at Rs 499.5. This level is also the lower-end of the Bollinger Bands on the weekly chart, thus indicating a possibility of strong suport around that level.

Momentum oscillators, meanwhile, suggest sluggish moves ahead in the stock as slow stochastic is below the fast stochastic line, while the MACD appears ripe to breach the zero-line on the downside.

(With inputs from Nikita Vashisht)