UPL Ltd. share price target

UPL posted volume growth of 8% yoy, driven by steady performance in LatAM and Europe. However, inability to take price increase (due to higher channel inventory) and adverse currency movement of 1% resulted in 7% yoy growth in net revenue to Rs56.9bn. Gross margin improved by 90bps yoy to 49% while EBITDA margin expanded by 30bps yoy to 21.4%. EBITDA grew by 8% yoy to Rs12.2bn, broadly in line with our estimate....

A consistent outperformer in a challenging industry UPL reported 4Q18 Revenue/EBITDA/PAT of INR 57bn / INR 12.2bn / INR 7.7bn (+7%/+8%/+6% YoY respectively), in-line with JMFe of INR 59.1bn/11.3bn / 7.87bn. Geographically, (i) India business grew 6% YoY with growth in new fungicides and successful farmer reception of 3 new launches, (ii) LATAM business grew 7% YoY driven by product launches throughout the value chain , (iii) Europe grew at 7%YoY(against the industry negative growth rate of 2%) driven by sugar beet herbicide portfolio (iv) ROW grew at 5% YoY driven by double digit growth in Africa and key South East Asian countries, and (v) North...

UPLL's revenue grew 6.5% YoY to INR56.9b (est. of INR58.9b). EBITDA margin expanded 30bp YoY to 21.4% (est. of 21.8%), led by gross margin expansion of 90bp YoY to 49%. EBITDA grew 8.2% YoY to INR12,180m (est. of INR12,854m). Adj. PAT fell 9.5% YoY to INR7,650m (est. of INR7,145m) in 4QFY18 due to a significant increase in the tax rate to 17.7% from 7.1% in 4QFY17. For FY18, revenue grew 6.5% YoY to INR173.8b. EBITDA margin expanded 40bp YoY to 20.2% in FY18, led by gross margin expansion of 120bp. Adj. PAT, thus, rose 8% YoY to INR21b.

A multitude of products going off-patent would unleash a generics opportunity of~USD3b over CY17-20. With strong R&D and integrated manufacturing facilities,UPL is in a sweet spot to grab the impending opportunity in the generics market. The company is also set to benefit from the increasing phenomenon of pest resistance across crops with its broad array of products, which enables it to launch new combinations to tackle resistance. Pest resistance to major agro chemical 'glyphosate' (market size of ~USD5b) could provide UPL with its next key growth driver - its variant, 'gluphosinate'

Agrochemicals maker UPL Ltd. posted the slowest profit growth in five quarters but still managed to beat estimates. UPL has reported healthy 25.3 percent growth year-on-year in consolidated profit at Rs 579 crore for quarter ended December 2017 despite weak operational performance. The bottomline growth was driven by tax credit, lower finance cost and higher revenue. Consolidated revenue from operations grew by 7 percent to Rs 4,194 crore during December quarter compared to Rs 3,919 crore in year-ago....

Despite headwinds in key geographies, UPL posted healthy volume growth of 12% yoy, driven by steady performance in India and Europe. However, price decline of 2% yoy and adverse currency movement of 3% resulted in 7% yoy growth in net revenue to Rs41.9bn. Gross margin improved by 30bps yoy to 54.5% while EBITDA margin expanded by 50bps yoy to 19.8%. EBITDA grew by 9% yoy to Rs8.3bn, marginally lower than our estimate....

We maintain NEUTRAL with a TP of Rs 823/sh (16x Dec FY19E EPS). UPL reported a muted revenue growth of 7.0% YoY, at Rs 41.9bn in 3QFY18, largely driven by volume growth (+12%), was negated by the impact of currency movements (-3%), and a drop in realisations (-2%). EBITDA de-grew marginally by 1.4% YoY to Rs 7.16bn, EBITDM stood at 17.1% (-145 bps YoY). The drop was largely on account of higher other expenditures including exchange difference (as % of revenues 27.3% in 3QFY18, +245 bps YoY). However, lower interest cost (-39% YoY) and tax credits led APAT to deliver growth of 25.1% YoY to Rs 5.7bn.

UPL posted robust numbers for 2QFY2018. In sales, the company posted gross revenues of `3,770cr v/s `3,541cr in 2QFY2017, growth of 6.5% yoy. The sales growth was driven by volume (11% yoy), while price dip was 2% and exchange losses deducted 3% from the top-line rise. On EBITDA front, the company posted an EBITDA of 18.0% v/s 15.5% in 2Q..

Q2FY18 revenue at Rs 38 bn was up 6% YoY, as strong volume growth of 11% YoY was partly offset by FX impact (at 3%) and price erosion (at 2%). Domestic growth at 10% was impressive given industry growth at low single digit.

We maintain NEUTRAL with a TP of Rs 782/sh (16x FY19E EPS). UPL reported muted revenue growth at Rs 37.7bn (+6.5% YoY) in 2QFY18, as volume growth of 11% YoY was negated by the impact of adverse currency movements (-3%), and a cut in realisations (-2%). EBITDA grew 23.5% YoY to Rs 6.7bn, and EBITDA margins rose 248bps YoY to 18.0%. The drop in raw material costs (-264bps YoY as a % of revenue), supported growth in operating profit. However, RPAT increased 43.4% YoY to Rs 2.3bn, owing to the absence of MTM forex loss in 2QFY18.