Apr 27, 2013, 07.14 PM | Source: Moneycontrol.com
Prabhudas Lilladher is bullish on United Phosphorous and has recommended a buy rating on the stock with a target of Rs 185 in its April 25, 2013 research report.
, Prabhudas Lilladher |
“United Phosphorous, Q4FY13 results turned out to be a pleasant surprise, both on the profitability as well as the balance sheet front. UPL reported adj. PAT of Rs3.1bn, 36 percent YoY, substantially higher than estimates. Net Working Capital days improved to 89 (compared to 113 days in FY12) driven by lower inventory held, tightening of debtors and re-negotiation of higher creditors days. We upgrade earnings by 11 percent/7 percent for FY14E/15E. Maintain .BUY. with a revised target price of Rs185.”
“UPL reported revenues of Rs28.2bn, 33 percent YoY (higher than est. of Rs24.5bn). Growth was driven primarily by volumes which increased 16 percent YoY, pricing increased by 4 percent YoY, while exchange contributed 12 percent of the growth. UPL reported EBITDA of Rs5.4bn, 39 percent YoY (est. of Rs4.3bn), with margins of 19.0 percent driven by gross margins improvement of 120bps YoY. UPL reported adjusted PAT of Rs3.1bn, 36 percent YoY, with EPS of Rs7.1 (tax rate is lower due to higher provisions in the earlier quarters). Despite increasing contribution from Brazil & unfavorable weather conditions during FY13, net working capital improved to 89 days. Management attributed the improvement in working capital to lower inventory held, tightening of debtors, re-negotiation of higher creditors days & improvement in industry environment. Management guided that working capital is likely to remain within 90-100 days range in FY14. We have modeled for working capital days of 100/101 in FY14E/15E.”
“We have upgraded earnings by 11 percent/7 percent to Rs 21.2/24.1 for FY14E/15E. With sustainable earnings growth and improvement in return ratios, stock is likely to get re-rated. We maintain BUY with revised target TP of Rs 185 (previous Rs 170),” says Prabhudas Lilladher research report.
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