Buy UPL, target price Rs 960: Centrum Broking

Centrum Broking has buy call on UPL with a target price of Rs 960. The current market price of UPL Ltd. is Rs 784.25.
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 60050.15 Crore) operating in Pesticides/Agro Chemicals sector.


UPL Ltd. key Products/Revenue Segments include Agrochemicals, Other Operating Revenue, Export Incentives, Sale of services, Royalty Income for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 11367.00 Crore, up 7.09 % from last quarter Total Income of Rs 10614.00 Crore and up 23.65 % from last year same quarter Total Income of Rs 9193.00 Crore. Company reported net profit after tax of Rs 1165.00 Crore in latest quarter.


Investment Rationale
UPL has grown its revenue/EBITDA/PAT at a CAGR of 30/34/14% over FY18-21 (9MFY22 revenue/EBITDA/PAT growth at 17/7/27% YoY), backed by a constant pipeline of M&As, steady expansion of organic manufacturing capacity/product portfolio, and a robust agronomic environment across key geographies over the last 3-5 years. The latest tie ups with global innovators has helped create a pipeline of USD2.5-4.5bn incremental revenue and we see an EPS CAGR of 11% over FY22-24E, which the brokerage believes is still not reflected in current multiples of 14x FY23E EPS / 7.6x EV/EBITDA.

Promoter/FII Holdings
Promoters held 28.24 per cent stake in the company as of 31-Dec-2021, while FIIs owned 34.27 per cent, DIIs 18.65 per cent.