Sharekhan has given Buy recommendation for UPL with a target price of Rs. 930 in its research report issued on Mar 16, 2022

Sharekhan’s research report on UPL

Tailwinds from high global crop prices augur well for UPL and would help it hike prices further, thereby supporting a seasonally strong Q4 (that accounts for 44%/40% of annual revenue from high-margin geographies of North America/Europe). Focus on increasing revenue share of differentiated products and sustainable solutions would drive up UPL’s EBITDA margin to 23.9% in FY24E (from 21.6% in FY21). Investment in the nurture.farm digital platform to transform UPL from product company to agrochemical service provider (cater to entire value chain) and drive long term value. A 10% likely annual revenue growth, margin expansion and lower interest costs ($300-400 million of debt repayment) would drive a strong 22% PAT CAGR over FY21-24E and an improvement in RoE to -20% in FY24E.

Outlook

Risk reward seems favourable given attractive valuation of 12.3x/10.6x FY23E/FY24E EPS, strong growth outlook, improving earnings profile (higher margin and RoE) and management focus to strengthen balance sheet. Hence, we maintain a Buy rating on UPL with an unchanged PT of Rs. 930.

More Info

At 12:20 hrs UPL was quoting at Rs 757.65, up Rs 5.95, or 0.79 percent.

It has touched an intraday high of Rs 761.35 and an intraday low of Rs 754.50.

It was trading with volumes of 20,281 shares, compared to its thirty day average of shares, a decrease of percent.

In the previous trading session, the share closed up 1.49 percent or Rs 11.05 at Rs 751.70.

The share touched its 52-week high Rs 864.75 and 52-week low Rs 580.85 on 08 June, 2021 and 26 March, 2021, respectively.

Currently, it is trading 12.39 percent below its 52-week high and 30.44 percent above its 52-week low.

Market capitalisation stands at Rs 57,887.90 crore.

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