Technology

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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