UPL Ltd. share price target

EBITDA increased 17% YoY expanding 60bp YoY to 19.7% (in-line). PAT increased grew 12% YoY, EBITDA increased 15% YoY (margin up 50bp to 20.1%) and adj. We expect the momentum to continue in 2HFY19, with revenue growth of 12% YoY and margin expansion of 80bp YoY. LATAM is an important geography for UPPL accounting for 41% of overall revenue (v/s 37% in 2QFY18). Management has maintained its growth (10-12%) and margins guidance on account of the holistic growth prospects across geographies. We maintain our revenue/PAT CAGR (FY18-20) estimate of 44%/8%, and continue valuing UPLL at 13x Jun20 EPS (~15% discount to its three-year average trading multiple) on account of (a) highly leveraged balance sheet (due to Arysta acquisition) leading to increased D/E, (b) pressure on return ratios and (c) higher exposure to forex risk. However, with key drivers of growth in place, we maintain our price of INR749 (20% upside).

UPL's consolidated revenue for Q1FY19 came in at Rs 4134cr, an increase by 7.3% yoy. This was primarily driven by rise in revenue from Agro activities and Non-Agro activities by 7.6 per cent and 7.3 per cent yoy, respectively. The operating profit for the quarter stood at Rs 797 cr, a rise...

We now value UPL at 9.0x Jun'20 EV/EBITDA and maintain Buy with a revised target price of Rs 700 (implied P/E of 12.6x Jun'20 EPS). UPL reported Sales/EBITDA/APAT growth of 11.0/15.3/7.8% to Rs 41.3bn/Rs 7.97bn/Rs 5.15bn respectively. India business reported a growth of 11.0% YoY to Rs 12.4bn on a lower base, while Latam business showed a recovery with a growth of 17.2% YoY to Rs 8.6bn.

31 July 2018 increased 11% YoY to INR41.3b (est. of INR41.9b) in 1QFY19, driven by volume growth of 8% YoY and price increase of 1% YoY. EBITDA grew 12.9% YoY to INR8,470m (est. of INR8,638m), with the margin expanding 40bp YoY to 20.5% (est. Higher interest cost of INR1,750m (est. of INR790m) was partly offset by a lower tax rate of 9.2% (est.

UPL Corporation Ltd, international arm of the UPL (United Phosphorus Ltd), has entered into an agreement to acquire Arystra Lifesciences for US$4.2bn, making it to Top 5 in the world. UPL will now have sales of US$5bn & 20%+EBDITA margins (presynergies).Transaction provides UPL a perfect match with powerful synergies across geographie..

20 July 2018 UPLL boasts of an agrochemical product portfolio that is spread out across geographies and crops (including fruits & vegetables, rice, soybean and cotton). The acquisition will not only boost UPPLs product portfolio for crops where it already has a strong presence, but also in those where it has limited presence (e.g. wheat, barley, nuts and a wide variety of specialty crops). This apart, the acquisition will strengthen the companys product portfolio in the European cereal market, where its presence is currently limited to sugar beet, fruits (grape) and vegetables. As Arysta is multiple times larger than UPLL in both the aforementioned categories, we believe the acquisition help UPPL to transform into a true integrated crop solutions provider. Arysta relies on contract manufacturers for raw material sourcing from low-cost manufacturing countries like India, China and Eastern Europe. Post-acquisition, the sourcing cost of Arysta will reduce given UPLLs strong manufacturing base.

UPL's long-term prospects remain positive, led by focus on branding and launching new innovative products, maintaining geographical presence , product and crop diversity, increasing share in the global agrochemical market, improving Innovation Turnover Index and consistently investing in backward as well as forward integration, resulting in better cost management. Acquisition of Arysta Life Sciences, a part of the US-based Platform Specialty Products, will make UPL the world's fifth largest crop protection company and the largest generic player with combined revenues of slightly lower than $4.6 billion . The company is currently the ninth largest with annual revenues of $2.7 billion. Further, given the strong manufacturing base of UPL, sourcing costs will be reduced as Arysta gets most of its raw materials from India and China. A strong supply chain can...

Net sales grew by 7% to ` 56.9bn lower than our estimate by 6%. Volume growth during the quarter was 8% and exchange impact of -1%. Adjusted EBITDA grew by 9% to ` 12.2bn higher than our estimate by 3%. PAT degrew by a percent to ` 7.4bn. North America, Latin America and Europe grew by 7% while India and RoW grew by 6% and 5% respectively. In FY18, industry witnessed a de-growth of 0.2% while UPL outperformed the industry with a 7% growth and constant currency growth of 9%. UPL...

We maintain BUY with a TP of Rs 851/sh (16x FY20E EPS) For 4QFY18, UPL reported muted revenues at Rs 56.91bn (+6.5% YoY). Volume growth of +8% was negated net cross currency movement of -1%. EBITDA stood at Rs 14.21bn (+36.4% YoY), as margins expanded to 25.0% (+554 bps YoY). EBITDAM expansion was driven by higher gross margins (+90bps YoY), lower employee costs (-49bps YoY) and drop in other expenditures & exchange difference (-415bps YoY). Reported APAT at Rs.7.36bn (-0.7% YoY) was muted as a result of higher interest costs (+92.5% YoY) and higher tax rate (17.6% +1042bps YoY).