Buy United Phosphorus; target of Rs 250: Angel Broking

Angel Broking's report on United Phosphorus (UPL)

"United Phosphorus (UPL) declared a robust set of numbers for 3QFY2014. For the quarter, the company posted sales of Rs 2,605cr, registering a yoy growth of 15.5 percent. The growth was aided by a 10 percent growth in volumes and a price appreciation of 2 percent, while the rest of the gains were on the back of a 3.0 percent rise in the exchange rate. On the operating front, the OPM came in at 16.2 percent vs 16.1 percent in the corresponding quarter of last year. However, in spite of lower expansion in the OPM, a lower rise in interest expenses, during the quarter, led to the PBT growing by 28.0 percent yoy. This, along with lower taxation during the quarter, led the company to post an almost 47.1 percent rise in the Adj. net profit during the quarter."

"For the quarter, the company posted sales of Rs 2,605cr, registering a yoy growth of 15.5 percent. In terms of geographies, Europe (24 percent) and India (21 percent) were the key regions which posted robust growth. These were followed by Latin America which posted a growth of 18 percent yoy. On the operating front, the OPM for the quarter came in at 16.2 percent vs 16.1 percent in the corresponding quarter of last year. However, in spite of a lower expansion in the OPM, a muted rise in interest expenses led the PBT to grow by 28.0 percent yoy. This, along with a lower taxation, led the company to post a 47.1 percent rise in the Adj. net profit during the quarter."

Outlook and valuation: "We expect UPL to post a CAGR of 12.0 percent and 15.0 percent in its sales and PAT respectively, over FY2013-15. At the current valuation of 9.1x FY2015E EPS, the stock is attractively valued. Hence, we maintain our Buy recommendation on the stock with a target price of Rs 250," says Angel Broking research report.

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