Technology

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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