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UPL Ltd Research Report - 03rd Feb 2016

Agrichemical | Published on Feb 03rd 2016

IT

For 3QFY2016, United Phosphorus (UPL) posted sales of Rs3,050cr, a yoy growth of 1.3%. Overall, growth was driven by price and volume growth of 3% and 11% respectively, while exchange had a weigh down effect by 13%, which impacted the sales. On the operating front, the OPM came in at 19.0% V/s 17.9% in 3QFY2015. This is in spite of lower sales as the GPM improved to 54.2% V/s 48.8% in 3QFY2015 on back of healthy volume growth and price rise. This aided the Adj. net profit to come in at Rs306cr V/s Rs264cr in 3QFY2015, a yoy growth of 15.9%. The Management has maintained its guidance of 12-13% volume growth with 100bps margin expansion in FY2016. We maintain our Buy recommendation on the stock with a price target of Rs480. Quarterly highlights: For the quarter, UPL posted sales of `3,050cr, a yoy growth of 1.3%. USA and Latin America posted a 12% and 14% yoy growth, respectively, during the quarter. Other key markets like India, Europe and ROW posted a dip of 17%, 9% and 8% yoy, respectively. Overall, growth was driven by price and volume growth of 3% and 11% respectively, while exchange had a weigh down effect by 13%. On the operating front, the OPM came in at 19.0% V/s 17.9% in 3QFY2015. This is in spite of lower sales as the GPM improved to 54.2% V/s 48.8% in 3QFY2015 on back of healthy volume growth and price rise. This aided the Adj. net profit to come in at Rs306cr V/s Rs264cr in 3QFY2015, a yoy growth of 15.8%. Outlook and valuation: We expect UPL to post a CAGR of 9.9% and 15.8% in sales and PAT respectively, over FY2015-17E. The Management has maintained its guidance of 12-13% volume growth with 100bp margin expansion in FY2016. We recommend a Buy a price target of Rs480.

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CMP 416
Target Price 480
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)33,020.24
MCAP NSE (Rs in Cr)33,063.33
P/E (x)22.17
EPS (Rs.)29.38
BV (Rs.)152.68
Div Yield (%)0.65
FV (Rs.)2.00
P/BV (x)4.52
EV/Sales (x)2.76
EV/EBITDA (x)13.93

Shareholding Pattern (%)

Foreign54.0
Promoter28.0
Institution9.0
Public & Others6.0
Corporate3.0
Grand Total100.0

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