Deutsche retains Buy on UPL, sees 40% upside as likely Arysta deal could add leverage
The research house said the potential acquisition of agrochemical business platform will raise leverage sharply and would imply a valuation of 10.3x CY17 EV/EBITDA.
July 11, 2018 / 12:43 PM IST
Global brokerage house Deutsche Bank has maintained its Buy rating on UPL with a target price at Rs 890 per share, implying a potential 40 percent upside as it feels the likely acquisition of Arysta could add leverage and may be an overhang on the stock.
The research house said the potential acquisition of agrochemical business platform will raise leverage sharply and would imply a valuation of 10.3x CY17 EV/EBITDA (enterprise value / earnings before interest, tax, depreciation and amortisation).
Earlier this week, the Mint said quoting people aware of the matter that UPL is close to buying the farm pesticides business of investor Bill Ackman’s Platform Specialty Products Corp.—known as Arysta LifeScience—for more than $4 billion in one of the largest outbound deals by an Indian company.
"The announcement could happen as early as this week. It will be a leveraged deal. UPL has arranged funds from a consortium of lenders, including a Japanese bank," the report added.
At 12:39 hours IST, the stock price was quoting at Rs 617.00, down Rs 18.05, or 2.84 percent on the BSE.