Technology

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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