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.
Investments in equity shares, debentures, etc., are not obligations of, or guaranteed by Wealth India Financial Services Pvt. Ltd., and are subject to investment risks. Click here to read our full disclaimer.
Other articles you may like
- Wealth Conversations – August 2022
- Change in “Motilal Oswal Midcap 30 Fund” scheme name
- Resumption of subscription to units of Designated Schemes of HSBC Mutual Fund
- Resumption of subscription to units of Designated Schemes of Aditya Birla Sun Life Mutual Fund
- Best practices to be followed for CDSL Demat account holders