Buy UPL; target of Rs 1070: Prabhudas Lilladher

Prabhudas Lilladher's research report on UPL

We fine tune our FY23E estimates by 2% to factor in 3Q’23 and 9M’23 performance, while we largely maintain our FY24/25 estimates. UPL reported results broadly in-line with our and consensus estimates with Revenue/EBITDA/PAT of Rs136.7bn/Rs30.3bn/Rs11.03bn (+21%/ +14%/ +13% YoY). Citing positive demand scenario globally coupled with better realizations, UPL remains confident to achieve upper limit of its Revenue and EBITDA growth guidance of 12-15% and 15-18% in FY23E, with growth largely driven by focus on differentiated solutions and new product launches. The company also expects to reduce its debt by USD500mn YoY in FY23E (USD1.3bn sequentially) led by a) better operating performance in subsequent quarter; b) release of working capital and c) recent restructuring of business verticals resulting into net cash inflow of USD259mn.

Outlook

We expect Revenue/PAT CAGR of 12%/17% over FY22-25E. Maintain ‘BUY’ with unchanged TP of INR1070 based on 14XSeptember FY24E EPS.