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CLSA
UPL (Buy)
Target: ₹1,100
CMP: ₹782.7
UPL is aiming for 25 per cent EBIDTA margins by FY26 vs 20.6 per cent in H1-FY22. Success in differentiated and sustainable products (management expects a 50 per cent contribution to sales from such products by FY26 from 29 per cent currently) and unique farmeroriented solutions that create demand for such products should enable UPL to achieve this goal.
UPL has three product categories: post-patent (plain-vanilla chemical products); differentiated (value-added chemical products, eg, Mancozeb molecules’ evolution since a 2011 Brazil launch); and sustainable (biological-based nextgeneration products, a $4 billion market).
Management expects incremental $2.5 billion risk-adjusted revenue in five years from 15 molecules in development, mostly in the differentiated and sustainable category. UPL’s In addition, collaboration with international peers for access to new molecules and a recent partnership with Chr. Hansen should enable UPL to achieve its goal of 50 per cent revenue from such products by FY26.
UPL has invested in digital platforms such as nurture.farm that provide a gamut of services to farmers for the entire agriculture value chain, from pre-sowing to post-harvesting
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