KR Choksey recommended accumulate rating on UPL with a target price of Rs 1142 in its research report dated May 23, 2019.
KR Choksey's research report on UPL
UPL reported a revenue growth of 49.8% YoY and 73.2% QoQ to INR 85.2 bn driven by strong performance across the LatAm and European regions. OPM declined by 486 bps YoY and 411 bps QoQ to 16.5% which led EBITDA at INR 14.1 bn. Net profit declined by 64.3% YoY and 43.8% QoQ to INR 2.06 bn due to lower other income, exceptional costs as well as foreign exchange loss for the quarter. Forex loss as reported at INR 1.2 bn (v/s forex gains of INR 2.0 bn in Q4FY18) while exceptional costs were significant at INR 3 bn related to acquisition of Arysta (acquisition, litigation costs). Other income was down 59.3% YoY (+29.7% QoQ) to INR 480 mn. On a proforma basis (excl. Arysta), UPL’s revenue were up by 15.2% YoY to INR 6.6 while OPM increased to 21.8% (+40 bps YoY). Proforma PAT was reported at INR 8.6 bn (+17.5% YoY). The board has declared a dividend of INR 8/share on a FV of INR 2. It has also announced a bonus of 1 equity share of INR 2 for every 2 fully paid-up share.
We valued the company by assigning a P/E multiple of 20x on the FY20E EPS of INR 57.1 and arrived at a target price of INR 1,142.0 (potential upside – 12.4% ). We have an ACCUMULATE rating on the stock.
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