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UPL Ltd Research Report - 05th Aug 2016

Agrichemical | Published on Aug 05th 2016

IT

For 1QFY2017, United Phosphorus (UPL) posted sales of Rs3,452cr V/s Rs3,205cr in 1QFY2016, ie a growth of 7.7% yoy. All markets posted double digit growth except for India and the USA, which posted growth of 1% and 5% respectively. Growth was on the back of 8% volume growth, while price dip contributed 2%, and exchange rate accounted for 2%. On the operating front, the OPM came in at 18.6% V/s 16.7% in 1QFY2016. This led to an Adj. net profit of Rs430cr V/s Rs340cr in 1QFY2016, ie a growth of 26.4% yoy. The Management maintains its guidance of 12-15% revenue growth and 60-100bp margin expansion. We maintain our Buy rating on the stock. Quarterly highlights: For 1QFY2017, the company posted sales of Rs3,452cr V/s Rs3,205cr in 1QFY2016, ie a growth of 7.7% yoy. All markets posted double digit growth except for India and the USA, which posted growth of 1% and 5% respectively. Growth was on the back of 8% volume growth, while price dip contributed 2%, and exchange rate accounted for 2% gain. On the operating front, the OPM came in at 18.6% V/s 16.7% in 1QFY2016. The improvement in the OPM was on back of higher gross margins, which came in at 53.6% V/s 52.0% in 1QFY2016. This led the company to post a net-profit of Rs430cr V/s Rs340cr in 1QFY2016, a growth of 26.4% yoy. 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 584
Target Price 684
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)33,588.03
MCAP NSE (Rs in Cr)33,643.79
P/E (x)22.55
EPS (Rs.)29.38
BV (Rs.)152.68
Div Yield (%)0.64
FV (Rs.)2.00
P/BV (x)4.60
EV/Sales (x)2.81
EV/EBITDA (x)14.15

Shareholding Pattern (%)

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

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