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UPL Ltd Research Report - 03rd May 2016

Agrichemical | Published on May 03rd 2016

IT

For 4QFY2016, United Phosphorus (UPL) posted sales of Rs4,292cr, up 20.5% yoy, mainly led by 25% growth in volume and a 1% rise in price. The exchange rate dipped by 6.0% during the quarter. In terms of geography, Latin America (Rs1,428cr), Europe (Rs872cr), USA (Rs971cr), and India (Rs417cr) posted a yoy growth of 57%, 8%, 13% and 4%, respectively. The ROW region posted flat sales of Rs652cr. On the operating front, strong sales growth led the gross margin to come in at 49.9% (V/s 47.8% in 4QFY2015), while the OPM came in at 21.6% (V/s 20.0% in 4QFY2015). Thus, the Adj. net profit came in at Rs574cr (V/s Rs451cr in 4QFY2015), a yoy growth of 27.4%. We recommend a buy on the stock. Quarterly highlights: For 4QFY2016, United Phosphorus (UPL) posted sales of Rs4,292cr, up 20.5% yoy, mainly led by 25% growth in volume and a 1% rise in price. The exchange rate dipped by 6.0% during the quarter. In terms of geography, Latin America (Rs1,428cr), Europe (Rs872cr), USA (Rs971cr), and India (Rs417cr) posted a yoy growth of 57%, 8%, 13% and 4%, respectively. The ROW region posted flat sales of Rs652cr. On the operating front, strong sales growth led the gross margin to come in at 49.9% (V/s 47.8% in 4QFY2015), while the OPM came in at 21.6% (V/s 20.0% in 4QFY2015). Thus, the Adj. net profit came in at Rs574cr (V/s Rs451cr in 4QFY2015), a yoy growth of 27.4%. Outlook and valuation: We expect UPL to post a CAGR of 16.0% and 18.9% in sales and PAT, respectively, over FY2016-18E. The Management has given its guidance of 12-15% volume growth with 60-100bp margin expansion in FY2017. We recommend a buy rating on the stock.

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CMP 595
Target Price 684
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)35,491.63
MCAP NSE (Rs in Cr)35,494.16
P/E (x)23.83
EPS (Rs.)29.38
BV (Rs.)152.68
Div Yield (%)0.60
FV (Rs.)2.00
P/BV (x)4.86
EV/Sales (x)2.95
EV/EBITDA (x)14.85

Shareholding Pattern (%)

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

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