Zydus Lifesciences is among the top five losers on the BSE since the opening bell today; opening 2.5% lower at Rs.1148.95, the stock price fell down further to an intraday low at Rs.1109, down 6%. Its 52-week high is at Rs.1323.90 and low at Rs.567.85.

The company announced Friday, post market closure that, through its wholly owned subsidiary, it was forming a a strategic partnership with Perfect Day Inc, a Temasek portfolio company. As part of the deal, Perfect Day will sell its 50% stake in Sterling Biotech (SBL) to Zydus. 

Post this transaction, Sterling Biotech will become a 50:50 JV with equal representation on the Board.

Analysts and fund houses are not too happy with this development with Nomura keeping  its stance neutral with a target price of Rs.1,020, while Motilal Oswal also maintained a neutral position, setting a target price of Rs.1,210.

In June’18, SBL was admitted to the Corporate Insolvency Resolution Process (CIRP). The National Company Law Tribunal (NCLT) ordered its liquidation in May 2019 and in the e-auction process in April’22, Perfect Day emerged as the successful bidder. In 2022, SBL’s 50% stake was valued under the Insolvency and Bankruptcy Code at Rs. 640 crore and today, SBL is valued at a 70% premium at Rs 1,100 crore with 50% stake valued at Rs 550 crore. And this premium is what has got the analysts worried as they wait to understand if this JV is worth it or not.