What is behind Morepan Lab’s 10% surge?

Morepen Laboratories shares soared by more than 10 per cent intraday on Friday on a report that the Delhi-based pharma company is in talks to sell its OTC (over-the-counter) business. Morepen Lab is in talks with Ajay Piramal Group to sell its OTC (over-the-counter) business of top brands including Burnol owing to the fact it it plans to monetize some of its mainstream brands when its larger rivals seek to extend their consumer product portfolio. Morepen Lab has authorized Deloitte Touche Tohmatsu to run a formal process and negotiations are at its peak.

Reacting to the news, the stock of Morepen Lab gained as much as 9 per cent on the NSE. As of now, Morepen Lab is quoting at Rs. 26.85 touching the day’s high and low at Rs. 28 and Rs. 25.75, respectively. The company has a huge range of front-ranking presence in the wellness category. Its array of popular OTC products includes Lemolate, Burnol and Sat Isabgol are the top brands in the respective categories.

Piramal Enterprises which is controlled by billionaire Ajay Piramal, has been a buyer in branded OTC product sector. Last May, the company obtained four brands from US drug maker Pfizer for Rs 110 crore, thus marking its third such acquisition in nine months. Larger Indian companies such as Piramals and Dr Reddy’s Laboratories are acquiring OTC brands in India and abroad in order to strengthen their presence.

On the other hand, during May, Dr Reddy’s obtained six OTC consumer healthcare brands from US drugmaker, Ducere Pharma. Though estimates differ, OTC drugs are seen as a high growth segment. Its size has expanded to about $3 billion in 2015. Large drug makers namely- Dr. Reddy’s, Sun Pharma and Cipla have given a significant push to their OTC products for the last two years.Morepen Lab share price touched its 52 week high value at Rs. 41.75 on 5th Jan ’16 whereas the 52 week low value is seen at Rs 13.05 on 23rd Sept ’15. The stock volume spurted by more than 5.52 times. Today’s trading session saw almost 1,08,29,907 shares being traded in the counter with a traded value of Rs. 2,921.91 lacs against its average volume for 20 days at 1805184.

Morepen Lab is analyzed by Dynamic Levels as the top 500 performing stocks for the June quarter among the 1700 stocks which are listed on the NSE. Morepen Lab is fundamentally strong and is safe for investment, as per Dynamic analysts. For 23rd Sept, the closest support and resistance levels of the stock read at Rs. 22.50 and Rs. 26.20.

In order to acquire more details on the support and resistance levels and also the fundamentals and financials of the stock, kindly refer to Morepen Lab share price forecast.