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UPL Ltd Research Report - 21st Jan 2016

Agrichemical | Published on Nov 04th 2015

IT

For 2QFY2016, United Phosphorous (UPL) posted a 4.2% yoy growth in sales to Rs2,729cr. The volume growth during the period was of 13% yoy, while price increases contributed around 2% yoy. The exchange rate on the other hand, impacted adversely by 11% yoy. On the operating front, the gross margins came in at 49.9% V/s 50.5% in 2QFY2015, which led the OPM to come in at 16.5% V/s 16.7% in 2QFY2015. The company posted a 12.3% yoy dip in its PAT for the quarter excluding the extra-ordinaries and profits from associates and subsidiaries. However, a higher share of profitability from associates and subsidiaries has enabled the company posted to post an Adj. PAT of Rs190cr V/s Rs180cr in 2QFY2015, a yoy growth of 5.5%. We maintain our Accumulate rating on the stock with a price target of Rs510. Quarterly highlights: For 2QFY2016, the company posted a 4.2% yoy growth in sales to Rs2,729cr. Its key markets - India and Latin America, posted a 5% and 8% yoy growth, respectively. ROW and USA posted a yoy growth of 12% and 10%, respectively. The only market to decline was Europe, which posted a 10% yoy dip in sales. The volume growth during the period was 13% yoy, while price increases contributed around 2% yoy. The exchange rate on the other hand impacted adversely by 11% yoy. On the operating front, the gross margin came in at 49.9% V/s 50.5% in 2QFY2015, which led the OPM to come in at 16.5% V/s 16.7% in 2QFY2015. The company posted an Adj. PAT of Rs190cr V/s Rs180cr in 2QFY2015, a yoy growth of 5.5%. Outlook and valuation: We expect UPL to post a CAGR of 15.0% and 20.0% in its sales and PAT respectively, over FY2015-17E. At the current market price, we recommend an Accumulate on the stock with a price target of Rs510.

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Accumulate

CMP 451
Target Price 510
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)32,110.70
MCAP NSE (Rs in Cr)32,136.05
P/E (x)21.56
EPS (Rs.)29.38
BV (Rs.)152.69
Div Yield (%)0.67
FV (Rs.)2.00
P/BV (x)4.39
EV/Sales (x)2.69
EV/EBITDA (x)13.58

Shareholding Pattern (%)

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

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