Buy UPL, target price Rs 930: Emkay Global
UPL Ltd. key Products/Revenue Segments include Agrochemicals, Other Operating Revenue, Export Incentives, Royalty Income, Sale of services for the year ending 31-Mar-2021.
By ETMarkets.com | Updated:
Agencies
Emkay Global has buy call on UPL with a target price of Rs 930. The current market price of UPL Ltd. is Rs 795.5 Time period given by analyst is one year when UPL Ltd. price can reach defined target. UPL Ltd., incorporated in the year 1985, is a Large Cap company (having a market cap of Rs 61689.03 Crore) operating in Pesticides/Agro Chemicals sector.
UPL Ltd. key Products/Revenue Segments include Agrochemicals, Other Operating Revenue, Export Incentives, Royalty Income, Sale of services for the year ending 31-Mar-2021.
Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 15977.00 Crore, up 40.56 % from last quarter Total Income of Rs 11367.00 Crore and up 24.38 % from last year same quarter Total Income of Rs 12845.00 Crore. Company reported net profit after tax of Rs 1621.00 Crore in latest quarter.
Investment Rationale
The brokerage believes UPLL’s strategy to expand its D&S solutions offerings and focus on increasing penetration in high-growth crops segments and markets is expected to drive sustainable growth and margin expansion. Despite a marginal reduction in our EPS estimates for FY23/24, it raises Mar’23E TP to Rs930 from Rs910 earlier, due to higher FCF generation on account of noncash charges. Key DCF assumptions: 1) 11.5% WACC; 2) FY25E exit EBITDA of Rs132bn; 3) 6% EBITDA CAGR from FY25E to FY35E; and 4) terminal growth rate of 4% in EBITDA starting FY35E.
Promoter/FII Holdings
Promoters held 28.45 per cent stake in the company as of 31-Mar-2022, while FIIs owned 35.3 per cent, DIIs 17.8 per cent.
UPL Ltd. key Products/Revenue Segments include Agrochemicals, Other Operating Revenue, Export Incentives, Royalty Income, Sale of services for the year ending 31-Mar-2021.
Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 15977.00 Crore, up 40.56 % from last quarter Total Income of Rs 11367.00 Crore and up 24.38 % from last year same quarter Total Income of Rs 12845.00 Crore. Company reported net profit after tax of Rs 1621.00 Crore in latest quarter.
Investment Rationale
The brokerage believes UPLL’s strategy to expand its D&S solutions offerings and focus on increasing penetration in high-growth crops segments and markets is expected to drive sustainable growth and margin expansion. Despite a marginal reduction in our EPS estimates for FY23/24, it raises Mar’23E TP to Rs930 from Rs910 earlier, due to higher FCF generation on account of noncash charges. Key DCF assumptions: 1) 11.5% WACC; 2) FY25E exit EBITDA of Rs132bn; 3) 6% EBITDA CAGR from FY25E to FY35E; and 4) terminal growth rate of 4% in EBITDA starting FY35E.
Promoter/FII Holdings
Promoters held 28.45 per cent stake in the company as of 31-Mar-2022, while FIIs owned 35.3 per cent, DIIs 17.8 per cent.
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