Prabhudas Lilladher has given Buy recommendation for UPL with a target price of Rs. 1020 in its research report issued on Oct 23, 2022

Prabhudas Lilladher’s research report on UPL

UPL announced strategic corporate realignment of its existing business by creating 4 distinct business verticals in the consolidated entity 1) India Agrtech (crop protection + Digital); 2) Global crop protection (Excl. India business); 3) Global seeds; 4) Manufacturing and specialty chemicals + others business through investments by marquee investors (ADIA, TPG, Brookfield and KKR) investing a total of USD500mn in two of these business platforms (valuing these entities at ~USD4.5bn which is equally split between the two; implying a deal multiple of ~26x FY22 EBITDA). While, ADIA and TPG will receive USD241mn for their exit from Non-crop protection in UPL Corp. (material subsidiary) business (valuation at 11x FY22 EBITDA) resulting into net proceeds of USD259mn to UPL Ltd.


We believe, with net proceeds of USD259mn (~Rs 20 bn) (<1% of EBITDA dilution) is likely to be utilized towards debt reduction and working capital requirement of the company and would not meaningfully impact earnings profile in the near term. While, on a longer term basis, it is a positive move in terms of unlocking fair value of each of the business segments. Hence citing the above reasons, we keep our EPS estimates for FY23/24E unchanged. Maintain BUY with an unchanged target price of Rs1020 based on 14xFY24E EPS.

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