Emkay Global Financial has given Buy recommendation for UPL with a target price of Rs. 910 in its research report issued on Feb 01, 2022

Emkay Global Financial’s report on UPL

UPLL delivered an all-round Q3 beat. Topline/EBITDA/PAT exceeded consensus estimates by 11%/ 6%/13% on the back of robust broad-based growth across the regions, except India, which remained flat YoY. Revenue growth of 24% YoY was driven by 11%/13% YoY growth in volume and pricing. Operating margins, however, contracted by 250bps YoY to 21.6% owing to inflationary trends in RM, coupled with elevated fuel and freight costs. Earnings grew by 18% YoY to Rs9.4bn, driven by lower interest outgo. Buoyant commodity prices, in-house manufacturing of key AIs and effective RM sourcing aided the Q3 performance. UPLL did its first registration through its Meiji collaboration for Flupyrimin for rice protection in India through its Meiji collaboration, with more registrations planned in Southeast Asia. Based on the 9MFY22 performance and expectations of a strong performance in Q4, UPL management expects to outperform their earlier FY22E guidance of revenue/EBITDA growth of 7-10%/12-15%.

Outlook

We believe that UPL’s focus on innovation will drive growth through differentiated offerings in high-growth markets, along with product introductions from its collaborations with Meiji and FMC. Based on Q3 numbers, we have marginally increased our FY23E/FY24E revenue by ~4% and EBITDA by ~2% and lowered earnings by ~3% due to rising depreciation and higher interest outgo. We maintain Buy with an unchanged Mar’23E TP of Rs910, based on a two-stage growth model.

More Info on Trent

At 17:30 UPL was quoting at Rs 773.95, down Rs 11.65, or 1.48 percent.

It has touched an intraday high of Rs 794.00 and an intraday low of Rs 771.10.

It was trading with volumes of 109,180 shares, compared to its thirty day average of 96,184 shares, an increase of 13.51 percent.

In the previous trading session, the share closed up 0.08 percent or Rs 0.65 at Rs 785.60.

The share touched its 52-week high Rs 864.75 and 52-week low Rs 514.10 on 08 June, 2021 and 23 February, 2021, respectively.

Currently, it is trading 10.5 percent below its 52-week high and 50.54 percent above its 52-week low.

Market capitalisation stands at Rs 59,133.30 crore.

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