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Informist, Tuesday, Sept. 8, 2026

--S&P assigns Sun Pharma preliminary 'BBB+' rating with stable outlook

HYDERABAD - S&P Global Ratings has assigned a preliminary 'BBB+' long-term issuer credit rating to Sun Pharmaceutical Industries Ltd., the rating agency said in a press release Tuesday.

The rating action was based on the company's proposed acquisition of US-based Organon & Co., which is expected to significantly expand its earnings base and diversify its therapeutic and geographic footprint.

S&P expects Organon to contribute 40-45% of the combined entity's EBITDA following completion of the acquisition, which Sun Pharma expects in the first quarter of 2027, the release said.

The acquisition is expected to nearly double Sun Pharma's revenue and earnings base, with revenue projected at about INR 1.3 trillion in the financial year 2027-28 (Apr-Mar) from an estimated INR 645 billion in FY27 excluding Organon.

The combined company is expected to benefit from Organon's strong presence in women's health, biosimilars and branded drugs, while potential cross-selling opportunities in markets such as China and Korea could provide additional upside.

The rating agency expects limited earnings before interest, tax, depreciation, and amortisation margin dilution from the acquisition, estimating Sun Pharma's EBITDA margin at 28-30% in FY28 and FY29. The EBITDA margin improvement is supported by a higher contribution from branded drugs, operational synergies and scale benefits, S&P said. Annual EBITDA is estimated at INR 360 billion-INR 415 billion during the period.

However, the Organon acquisition will increase Sun Pharma's leverage, with S&P expecting the debt-to-EBITDA ratio to rise to about 1.8 times in FY28 from a net-cash position in FY26. Strong operating cash flow is expected to help the company deleverage, with the ratio projected to improve to around 1.5 times in FY29.

The rating could face downward pressure if integration challenges, higher restructuring costs or delayed synergies hurt EBITDA, or if leverage remains sustainably above two times. S&P could raise the rating if Sun Pharma integrates Organon effectively, generates healthy synergies and reduces debt-to-EBITDA on a sustained basis.

For the June quarter, Sun Pharma had reported a consolidated net profit of INR 28.95 billion on revenues of INR 153 billion. At 1440 IST, its shares traded slightly lower at INR 1,883 on the National Stock Exchange.  End

US$1 = INR 94.85

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Narayana Krishna

Edited by Himanshi Gupta

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