Technology

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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