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PhillipCapital
UPL (Buy)
Target: ₹920
CMP: ₹790.2
UPL has reported consolidated revenue of ₹8,515 crore, (+9 per cent/-33 per cent y-o-y/q-o-q), 2 per cent above our and in-line with street estimates. The growth of 9 per cent y-o-y was driven by volumes (6 per cent y-o-y), price increase (2 per cent y-o-y) and currency benefit (1 per cent y-o-y).
North/Latin America/India regions were the key contributors with 19 per cent/24 per cent/27 per cent growth.
EBITDA margin was at 21.9 per cent, 10 bps above our estimate led by strong improvement in gross margins (18 2 bps y-o-y). The reported EBITDA was at ₹1,863 crore (+5 per cent/-34 per cent y-o-y/q-o-q), 3 per cent ahead of our and 4 per cent below street estimate.
The reported PAT was at ₹677 crore, in-line with our estimate. However, the adjusted PAT after forex and other exceptional costs was at ₹707 crore, 5 per cent/4 per cent above our/street estimates. We continue to expect UPL to outperform in FY22/23 led by higher crops prices, better agronomics conditions, benefit of recent price hikes and its continued focus towards faster growing and higargin bio-solution products. Also, UPL is committed to reduce its debt below 2x by FY22 (2.4x in FY21). Separately, UPL’s rising dominance in global agrochemicals market complemented by integrated manufacturing keep us optimist about it.
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