‘Buy’ Sun Pharma stock after Organon deal - HDFC Securities explains why; share price target

Sun Pharma share price: Sun Pharmaceutical Industries Ltd shares are trading flat on Tuesday. However, the stock gained over 7% in the previous session after signing an agreement to acquire US-based Organon & Co in an all-cash transaction. Amid this, domestic brokerage firm HDFC Securities has maintained its positive stance on the drugmaker, raising its target price with a ‘Buy’ call.

Meanwhile, after the announcement of the Organon deal, Sun Pharma shares gained 7.03% in the previous session on Monday to settle at Rs 1733.80 a share on BSE.

In its latest note, the brokerage highlighted that the acquisition provides immediate and substantial scale but emphasized that “growth revival in established brands, cross leverage of Sun's branded generic business, and sustaining growth in Innovative Medicine business with focus on cross-selling and in-licensing remain key."   

The Organon deal 

The transaction values Organon at a enterprise valuation of $11.75 billion. Sun Pharma would acquire 100% of Organon's shares at $14 per share, translating to a total equity value of roughly $3.99 billion. 

To fund this, the Indian pharma giant will finance $2-2.5 billion through its own internal accruals and raise $1.5-2 billion through debt. Following the merger, which is expected to close in early 2027, Organon will be delisted from the New York Stock Exchange (NYSE), the brokerage said.

Why ‘Buy’ call on Sun Pharma

For HDFC Securities, the rationale behind the 'Buy' call  is that the brokerage believes the buyout would expand Sun Pharma's innovative medicine portfolio, pushing its share to 27% by FY26E, noting “with entry into Women’s Health (USD 1.75 bn sales; brands like Nexplanon), diversifying its portfolio beyond derma and opthal.”

The brokerage noted that the deal also unlocks access to a $691 million biosimilar business and strengthens the company's foothold in the Chinese market with established generic and biosimilar products. 

Additionally, the brokerage expects the combined entity to generate cost synergies of over $350 million within the next two to four years.  

Sun Pharma share price target

HDFC Securities expects that the deal will be "sales/EBITDA/PAT accretive by 80%/82%/27% in FY28". The drugmaker would transition from a net cash company, holding $3.2 billion as of December 2025, into a net debt company carrying approximately $8 billion, it said

HDFC Securities raised its target price on Sun Pharma stock to Rs 2,030, up from the previous Rs 2,000, while maintaining a 'Buy' rating.