Buy UPL; target of Rs 880: Sharekhan

Sharekhan is bullish on UPL has recommended buy rating on the stock with a target price of Rs 880 in its research report dated May 08, 2023.

Broker Research

May 11, 2023 / 13:09 IST

Buy

26 Aug, 2025 12:21

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Sharekhan's research report on UPL

Weak Q4FY23 results with a 2%/400 bps miss in consolidated revenue/EBITDA margin at Rs. 16,569 crore/18.2%, up/down 4.5%/445 y-o-y due to a decline in post-patent product price, idle capacity costs, and a higher share of low-margin LatAM region. Adjusted PAT of Rs. 821 crore (down 46% y-o-y and 52% below our estimate) was further impacted by higher depreciation and tax rate. North America revenue fell by 14% y-o-y to Rs. 3,009 crore due to steep decline in Glufosinate prices and delayed spring impacted herbicides/insecticides demand. Revenue from LatAM/Europe/India/RoW grew by 11.9%/6.5%/14.7%/5.9% y-o-y. Volume remained muted at +1% y-o-y while product realisation declined by 3% y-o-y and there was positive currency impact of 6% y-o-y. FY23 EBITDA growth of 10% missed guidance of 15-18% due to subdued Q4. FY24 revenue/EBITDA guidance growth of 6-10%/8-12% would also be dependent upon recovery in H2FY24 as oversupply from China would keep product price/margin under check in H1FY24. We thus cut our FY24/FY25 earnings estimate sharply by 24%/16%.

Outlook

Valuation of 11.4x/8.9x FY24E/FY25E EPS seems attractive and thus we maintain a Buy on UPL but with a lower PT of Rs. 880 (to reflect an earnings cut).

For all recommendations report, click here