Stocks

UPL stock slumps 9.4% after KPMG resigns as auditor of its subsidiary

Our Bureau Chennai | Updated on October 16, 2020 Published on October 16, 2020

Shares of UPL, formerly United Phosphorus Ltd, crashed 9.4 per cent, after the auditor of its subsidiary resigned.

“In order to re-organise the Audit Process to improve Productivity, at the request of the company, KPMG Mauritius has resigned as statutory auditors of UPL Corporation Limited, Mauritius,” the company said in a notice to the stock exchanges.

“BSR & Co. LLP, Chartered Accountants, continue to carry out the audit of Group Consolidated Financials of UPL Ltd, India which includes UPL Corporation Ltd, Mauritius, and its subsidiaries. BSR & Co. LLP is a sub-licensee of KPMG in India,” the company statement added.

The resigning auditor has clarified that there were no circumstances connected with their resignation which is consider should be brought to the notice of the members.

After plunging to day’s low of ₹458.85, a fall of 9.39 per cent, on the BSE, the stock ended the day at ₹467.10, still down 7.77 per cent, over the previous day’s close. However, analysts are unperturbed by the event.

“We remain positive in UPL, as the Audit responsibility of its leading subsidiary is just getting shifted from local Mauritius KPMG team to Global KPMG,” said Phillip Capital, which maintained a Buy on UPL with a price target of ₹725.

Phillip Capital is optimistic on UPL as it is entering into strongest phase of season in key markets of North & Latin America (with favourable pricing, demand and weather outlook there).

Also, UPL’s earning leader in the agri sector with 53 per cent y-o-y growth in Q2, strong export momentum and on-going financial de-leveraging are other key positives, it said.

Keshav Lahoti, Associate Equity Analyst, Angel Broking, said: “We believe this is sentimentally negative for the stock as the resignation of an auditor raises questions in the minds of the investors.”

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Published on October 16, 2020
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