MUMBAI: A fresh round of acquisition talk took the Piramal Healthcare stock soaring in early trade on Wednesday, but it came off shortly after the company’s promoters said their share was not up for sale.

Piramal Healthcare’s shares hit the day’s high of Rs 577.50, over 5% up, on a day when the broad market was red. Shares ended the day down 2.9% at Rs 526.60.

The grapevine is rife of talk about a possible deal between Piramal and one of the three global majors Pfizer, GlaxoSmithKline and Sanofi Aventis valuing the Indian company’s shares anywhere between Rs 650-725 each.
“There is no proposal by the promoters for selling any stake in the company (Piramal),” the company disclosed to the Bombay Stock Exchange.

“This time, the company is not getting sold, Piramal is selling the domestic formulations business,” said a person familiar with the developments. An investment banker said the promoters put the company on the block two years ago but did not get the desired valuation after global equities were hit during the economic downturn.

Both Glaxo and Pfizer have stated aggressive plans of expansion into the Indian pharmaceutical market, making Piramal’s business fairly attractive. Piramal has 55-60 products in the domestic market, with sales of around Rs 2,000 crore and operating margin of 22-25%.

Piramal’s products fit in well with Pfizer’s portfolio in India, because there is hardly any overlap, said an analyst with a domestic brokerage.

The Indian pharmaceutical company may get a valuation of nearly four times domestic sales for the division, he said. “At that price, the valuation of the stock will go up to Rs 730.”

In addition to domestic formulation business, Piramal is into the contract research and manufacturing, or CRAMS, business, that has been sluggish for the past four years, the analyst with the domestic brokerage said.

Revenue of CRAMS and other businesses is estimated to be around Rs 1,700 crore, with an operating margin of around 15%, he added. Moreover, the company’s CRAMS business is heavily dependent on Pfizer, making it hard for Piramal to grow or sell the remaining business after domestic operations are sold, he said.

A Pfizer spokesperson said the company will not comment, terming this deal talk “rumour and speculation.” Queries to GlaxoSmithKline and Sanofi Aventis went unanswered. However, recent moves by Piramal raise questions over the company’s intent to sell now.

Recently, it bought oral contraceptive brand iPill from Cipla. The brand is expected to boost Piramal’s contraceptive sales as it already made the product that will now be branded iPill.