UPL Ltd.

June 15, 2015 . Equities Desk

Established in 1969, UPL Ltd (UPL) is a crop protection, chemicals and seeds company. The company offers a wide range of products while operating through its two segments, namely, agro activities and non-agro activities. UPL’s product portfolio includes insecticides, fungicides, herbicides, fumigants, plant growth and regulators and  odenticides. Globally, UPL has presence in North America, Europe, Latin America and Rest of the World (RoW), apart from India

Valuation and view

UPL is well placed as a global player in agrochemicals space. The company showcased strong performance in Q4FY15 with a growth of 8.6% and 22.1%, respectively, in consolidated top-line and bottom-line. Further, strong product pipe-line coupled with expectations to obtain new registrations makes us positive about the stock. The comfortable level of working capital cycle at 90 days in FY15, Debt/Equity at 0.30x and interest coverage ratio at 3.74x, makes UPL financially strong, thereby reiterating our stance on the stock.

We initiate BUY rating on UPL. At a current CMP of Rs 520.8, UPL is currently trading at an EV/EBITDA of 7.8x FY16E and 6.0x FY17E. Considering the company’s strong fundamentals, we recommend ‘BUY’ with a target price of Rs 621.2, which implies potential upside of ~19.3% to the CMP from 1 year perspective.

Research Report UPL Ltd

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