Can Sun Pharma cure Ranbaxy's woes?

The first question facing observers would be whether Sun would be able to help Ranbaxy get past its troubles with the US FDA, which has now stopped imports into the US from all four of its manufacturing plants in India.

In a mega USD 4 billion deal, Sun Pharma announced it would buy troubled Indian peer Ranbaxy in an all-stock deal.

Sun, a top player in the Indian pharma industry, has acquired several companies in the past but of a relatively-smaller nature, the previous most-high profile acquisition being of Israeli drugmaker Taro.

Also read: Sun Pharma to acquire Ranbaxy in deal worth $4 bn

"Ranbaxy has been a problem child. And previously, Sun would acquire small companies that wouldn't hit operating costs," said Surajit Pal, Pharma Analyst with Prabhudas Lilladher. "This is a big acquisition."

Investors should not expect Ranbaxy's FDA issues in a hurry, Pal said. "Daiichi (Ranbaxy's previous parent) had a very good relationship with the FDA. Given the scale of this acquisition, the gestation period [for the acquisition to succeed] could be long."

However, Sun is paying is paying less than what Japan's Daiichi had paid when it acquired Ranbaxy in 2007 from its erstwhire promoters Malvinder and Shivinder Singh.

Given the lower cost and that much of Ranbaxy's manufacturing-practices troubles have come out since, observers say the Sun would have priced in what it should expect over the FDA issue.

"Knowing Dilip Sanghvi of Sun Pharma, he will never overpay [for an acquisition]," said Ramesh Adige, a former executive director with Ranbaxy. "The due diligence process in such a deal will be such that valuation will be more or less spot on," he added. "It will catapult it into the number one company in India."

"I am sure Singhvi has looked at the company," said Habil Khorakiwala, chief of Wockhardt. "This deal is good for Indian pharma industry."

Shasun Pharma stock price

On April 07, 2014, at 11:13 hrs Shasun Pharmaceuticals was quoting at Rs 77.65, up Rs 0.65, or 0.84 percent. The 52-week high of the share was Rs 94.20 and the 52-week low was Rs 45.60.

The company's trailing 12-month (TTM) EPS was at Rs 6.08 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 12.77. The latest book value of the company is Rs 50.37 per share. At current value, the price-to-book value of the company is 1.54.