Motilal Oswal has given Neutral recommendation for UPL with a target price of Rs. 790 in its research report issued on Oct 30, 2021

Motilal Oswal’s research report on UPL

UPLL reported strong volume growth (15%), despite a disruptive supply chain. Revenue grew across geographies, led by Europe, Latin America, and North America. It reported an in line EBITDA, but adjusted PAT was 17% lower than our estimate, due to an increase in the tax rate and higher MI than estimated. Net debt increased by INR28.1b QoQ and INR4.4b YoY in 2QFY22 and stood at INR243b in Sep’21. Net working capital days increased by eight days YoY to 114 days in 1HFY22. – Factoring in its 2Q performance, we have reduced our FY22E earnings estimate by 4%, but have maintained the same for FY23E. We maintain our Neutral rating.

Outlook

Factoring in its 2Q performance, we have reduced our FY22E earnings estimate by 4%, but have maintained the same for FY23E. We maintain our Neutral rating with a TP of INR790/share.

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