UPL Ltd. share price target

UPL numbers beat our estimates across the board. Revenue beat (+2.8%) due to strong volume and price growth, EBITDA beat due to lower-than-expected employee expenses, and Adj. PAT beat was due to reduced interest cost and one-time tax benefit.

The quarter’s revenue reached Rs. 11,090 crore, marking a 9% increase y-o-y and a 22% q-o-q rise.

UPL delivered strong beat (+4.5%) on revenue but PAT missed our estimates materially due to higher inventory cost, increased finance expenses and elevated impairment loss on trade receivables.
Revenue beat expectations with 16% volume growth, led by strong gains in RoW, North America, and Europe.

UPL’s revenue missed our estimate (-2.9%) due to a steep decline in price realization. The EBITDA missed our estimate due to better-than-expected operating expenses and liquidation of high-cost inventory.

UPLL reported a weak quarter as revenue grew marginally (1% YoY), led by strong volume growth (up 16%) offset by lower agrochemical prices.

UPL’s revenue beat our estimates due to growth in Europe and Rest of the World (RoW) region. The EBITDA beat our estimate due to lower-than-expected other expenses and lower than expected employee costs.

UPLL reported a weak quarter as revenue declined 15% YoY, primarily due to
lower agrochemical prices (down 15% YoY) and volume decline of 2% YoY.
EBITDA margins contracted 450bp YoY largely due to higher rebates (~5%
price impact) and liquidation of high-cost inventory, partly offset by an
improved product mix and a lower cost of goods sold.

For Q3FY24, UPL’s revenue declined by 27.7% YoY and 2.8% QoQ to INR 98,870 Mn due to a 5.0% YoY decline in volume and 24.0% YoY decline in price realization which was marginally offset by forex benefit of 1.0%. The revenue in Latin America (43.4% of revenue) declined by 28.3% YoY (-15.0% QoQ) to INR 42,860 Mn due to challenges in pricing in key herbicides and insecticides, and overall volume growth was offset by a decline in price realization.

For Q2FY24, UPL’s revenue declined by 18.7% YoY but grew by 13.5% QoQ to INR 1,01,700 Mn due to a YoY decline in volume of 7.0% and a decline of price realization of 15.0% which is marginally offset by forex benefit of 3.0%. The revenue in Latin America (49.5% of total revenue) declined by 17.4% YoY to INR 50,330 Mn due to a price decline in Brazil for Glyphotal and Trunfo but there was volume growth in Mexico and Argentina.

UPL reported a weak Q2FY24 primarily on channel destocking and higher pricing pressure. All segments reported revenue decline YoY. However, differentiated and sustainable product portfolio posted volume growth of 11% YoY. Also, the seed business recorded 10% revenue growth YoY.

In Q1FY24, UPL’s revenue de-grew by 17.2 YoY/ 45.9% QoQ to INR 89,630 mn. This revenue de-growth was led by continuing trend of falling prices and poor demand from dealer level due to destocking of channel inventory.