Analysts estimate a roughly 8-10 per cent hit to profit for the year as Sun Pharma struggles to fix manufacturing problems at one of its own key plants and those of Ranbaxy Laboratories, the troubled rival it bought last year.
"FY2016 is likely to be a washout for revenue growth as well as profitability," Kotak analyst Chirag Talati said in a note to clients, reiterating his "sell" rating on the stock.
Sun Pharma said late Monday it was trying to expedite the resolution of at least of Ranbaxy's plants, which are barred from exporting to its largest market, the United States, over manufacturing quality issues.
This would most likely be the Mohali site in northern India, analyst Talati said.
Supply constraints due to issues at Sun Pharma's own Halol plant in Gujarat, which also has a US ban, are expected to continue "for some time," the world's fifth-largest generic drugmaker said.
Shares in the company fell as much as 16.1 per cent in early trade on Tuesday, heading towards their biggest-ever intraday fall.
Analysts on average expect Sun Pharma to report profit after tax of Ra 7,052 crore ($1.11 billion) on revenue of Rs 3,128 crore for 2016, according to Thomson Reuters data. Of 38 analysts that cover the stock, 23 recommend buying it, 12 have a "hold" rating, while 3 recommend selling it.
The company usually trades at a premium to most peers at a multiple of 30.56 times its 12-month forward earnings, according data from Thomson Reuters Eikon. But that may not sustain in the long term, some analysts said on Tuesday.
Sun Pharma is also evaluating divesting some non-core businesses, and these could be the HIV/AIDS and malaria tenders it participates in in Africa, Kotak's Talati said.
The efforts are all part of the company's integration of Ranbaxy, and will help it "revert to a more sustainable growth trajectory" after fiscal 2016, it said.
"Although we expect near-term margin pressure (R&D costs to rise), this is positive for profitability longer term," Barclays analyst Balaji Prasad said in a note.
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