Global crop protection products manufacturer UPL is likely to report strong performance for the September quarter led by growth in most markets and a favourable product mix, said analysts.
The company is likely to report a 31.2 percent year-on-year growth in consolidated net profit to Rs 831.5 crore in the quarter ended September, according to an average of estimates from six brokerage houses polled by Moneycontrol.
The company will report its quarterly earnings on November 1, just days after it announced a massive restructuring of its business to unlock value and induct private equity investors in key business verticals such as Indian crop protection and global seeds.
During the quarter, UPL’s consolidated revenues are expected to have risen 15 percent on a year-on-year basis to Rs 12,129.7 crore aided by strong growth in Indian, North American and Latin American markets.
“We expect UPL to report healthy revenue growth, driven by all major regions except Europe which is likely to remain flat due to drought,” brokerage firm Kotak Institutional Equities said in a preview note.
Analysts believe that the Indian operations will report the highest revenue growth in the September quarter due to recovery of some lost sales in the June quarter.
The Latin American and North American markets, which account for nearly half of UPL’s sales, likely saw more than 10 percent on-year growth in sales in the reporting quarter, brokerage firm Motilal Oswal Financial Services said in a preview note.
The strong sales performance will flow into UPL’s operating show with consolidated operating profit likely to rise 13.2 percent on-year to Rs 2,186.6 crore in the September quarter.
Analysts expect the company’s consolidated operating margin to expand 121 basis points on a year-on-year basis to 19.5 percent in the reporting quarter largely because of higher share of high margin products in the overall sales mix.
Besides the quarterly earnings, investors focus will be on the company’s debt position in light of the near $400 million jump in gross debt in the June quarter and management’s commentary on raw material prices.
On October 31, shares of UPL ended 1.7 percent higher at Rs 725.9 on the National Stock Exchange.
(Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.)
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