Buy UPL; Target Of Rs 632: Sharekhan
Sharekhan is bullish on UPL recommended buy rating on the stock with a target price of Rs 632 in its research report dated October 30, 2020.
Nov 2, 2020 / 03:10 PM IST
Sharekhan's research repor on UPL
UPL reported better-than-expected revenue growth of 14.4% to Rs. 8,939 crore (5.4% ahead of our estimate) driven by growth across regions. EBITDA margin of 20.2% (up 54bps y-o-y) lagged our estimates, given pricing pressures and unfavorable forex movement in Latin America. . H2FY2021 to be strong for the US, Europe and Latin America, led by good agronomics; margins to expand led by price hikes in Latin America and growth in high-margin regions of US and Europe. Company aims to reduce debt by $700-750 million and targets a net debt-equity ratio of 2x by March 2021. Management reiterated revenue and EBITDA growth guidance of 6-8% and 10-12%, respectively, for FY2021.
We expect PAT CAGR of 16% over FY2020-FY2023E, which would help generate cumulative FCF of Rs. 12,584 crore over FY2021E-FY2023E and help deleverage balance sheet). We retain Buy on UPL with an unchanged PT of Rs. 632.
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