Motilal Oswal Financial Services

1 August 2020

UPL

1QFY21 Results Update | Sector: Agri

UPL

Estimate change

TP change

Rating change

Motilal Oswal values your support in

the Asiamoney Brokers Poll 2020 for

India Research, Sales and Trading

team. We

request your ballot.

CMP: INR478

TP: INR527 (+10%)

Neutral

Subdued sales; debt remains a concern

Revenue and PAT below est.; in-line EBITDA



Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

12M Avg Val (INR M)

Financials & Valuations (INR b)

Y/E Mar

2020 2021E

Sales

357.6

377.5

EBITDA

75.2

83.4

PAT

27.4

28.4

EBITDA (%)

21.0

22.1

EPS (INR)

35.8

37.2

EPS Gr. (%)

11.2

3.6

BV/Sh. (INR)

213

242

Ratios

Net D/E

1.5

1.2

RoE (%)

17.7

16.3

RoCE (%)

9.7

Payout (%)

24.8

20.0

Valuations

P/E (x)

13.3

12.9

EV/EBITDA (x)

8.2

7.1

Div Yield (%)

1.3

1.5

FCF Yield (%)

11.1

13.7

UPLL IN



765

365.4 / 4.7

618 / 240

5/-2/-20

2233

In 1QFY21, gross margin expansion and synergy benefits aided EBITDA

growth, whereas revenue stood flat YoY, on account of: (i) supply chain

disruption in Latin America, North America, and Europe, (ii) the

postponement of sales in Brazil from 1Q to 2Q due to fluctuation in the

Brazilian real, and (iii) pre-buying in North America at the end of 4QFY20

impacting growth in the region in 1QFY21.

We lower our earnings estimate by 8%/6% for FY21/FY22, factoring lower-

than-expected earnings and moderation in growth in Latin America and

North America. In our view, high debt remains a key concern on the stock.

Maintain

Neutral.

Muted show in LATAM / North America, but India outshines



2022E

411.5

92.6

33.6

22.5

43.9

18.2

419

0.9

16.9

10.8

20.0

10.9

6.1

1.8

13.9



Shareholding pattern (%)

Promoter

DII

FII

Others

Jun-20 Mar-20 Jun-19

27.9

13.2

12.6

9.9

40.6

41.9

43.0

18.4

17.6

19.2

UPLL reported revenue decline of 1% YoY to INR78.3b (est.: INR86.4b) in

1QFY21 (price: -1%; volume and exchange impact stood flat YoY). Gross

margins improved 20bp YoY to 43% on improvement in the product mix and

geography mix. EBITDA margins expanded 170bp YoY to 22.7%, and EBITDA

grew at 7% YoY to INR17.8b (est.: INR18.5b). Adj PAT was up 10% YoY to

INR6.5b (est.: INR6.9b), aided by EBITDA growth and higher other income,

offset by higher depreciation and interest cost.

Note that we have excluded

the contribution made toward the PM CARES Fund for COVID-19 (of

INR750m) from EBITDA and reported it under exceptional items.

In 1QFY21, UPLL reported strong revenue growth of 27% YoY in India v/s

15% industry growth. Europe edged up 1% YoY due to supply chain delays,

which resulted in a shift in revenues to 2Q. Robust business growth in

Southeast Asia owing to rains and synergies led to 10% YoY growth in RoW.

Revenue from the LATAM region declined 16% YoY on forex volatility in Brazil,

which led to the postponement of orders to later quarters. Revenue from

North America declined 14% YoY on pre-buying due to COVID-19 in 4QFY20.

According to management, for 1QFY21, cost synergy realized from the

Arysta acquisition stood at INR830m (USD11m) and revenue synergies at

INR530m (USD7m).

Highlights from management commentary



Note: FII includes depository receipts

Debt:

Gross debt was INR325b as of Jun’20 v/s. INR288b in Mar’20. Net debt

was INR220b as of June’20 (similar to March levels).

UPLL aims to reduce net debt to EBITDA to 2x by FY21 from 2.9x as of FY20.

It also targets reducing net debt by USD500m in FY21.

The company has guided for revenue growth of 6–8%, with EBITDA growth

of 10–12% in FY21 (in normal case scenario).

Research Analyst: Sumant Kumar

(Sumant.Kumar@MotilalOswal.com)

Darshit Shah

(Darshit.Shah@motilaloswal.com) /

Yusuf Inamdar

(yusuf.inamdar@motilaloswal.com)

Investors are advised to refer through important disclosures made at the last page of the Research Report.

Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

UPL

Valuation and view



UPLL’s key markets witnessed revenue impact in 1QFY21 due to supply chain

issues, pre-buying in 4QFY20 (North America), and postponement of demand

(Latin America). On the other hand, strong performance was witnessed in India

and RoW. However, the 1QFY21 EBITDA margin expanded due to gross margin

expansion and synergy benefit.

Debt remains a key concern, in our view. During the quarter, the company

raised INR37.8b by issuing a 10-year bond, whereas it made a repayment of

INR6.2b toward a five-year bond in the tender offer. Thus, gross debt increased

to INR325b (as of Jun’20) v/s INR288b (in Mar’20); however, net debt stood flat

QoQ at INR220b.

Notably, UPLL currently has a cash balance of INR105b as the management has

taken a conscious call to hold cash instead of repaying debt to counter issues

related to the global pandemic.

We reduce our earnings estimates by 8%/6% for FY21/FY22, factoring lower-

than-expected earnings and moderation in growth in Latin America and North

America.

Expect revenue/EBITDA/PAT CAGR of 7%/11%/11% over FY20–22E. We value

the stock at 12x FY22E EPS and arrive at TP of INR527. Maintain

Neutral.

(INR Million)

FY21 Var

1QE

86,361 -9%

9.2

67,879

18,481 -4%

21.4

6,100

4,700

400

8,081 11%

8,081 -1%

727

9.0

481

6,873 -20%

6,873 -6%

-6.1

8.0

Cons.: Quarterly Earning Model (Incl-Arysta)

Y/E March

FY20

FY21

FY20

FY21

2QE

3QE

4QE

Net Sales

79,060 78,170 88,920 1,11,410 78,330 87,467 95,237 1,16,473 3,57,560 3,77,507

YoY Change (%)

91.2 83.6 80.7

30.7

-0.9 11.9

7.1

4.5

63.7

5.6

Total Expenditure

62,480 61,980 68,220 89,720 60,540 68,574 72,285 92,704 2,82,400 2,94,104

EBITDA

16,580 16,190 20,700 21,690 17,790 18,893 22,952 23,768 75,160 83,404

Margins (%)

21.0 20.7 23.3

19.5 22.7 21.6 24.1

20.4

21.0

22.1

Depreciation

4,460 4,760 4,950

5,950 5,220 6,300 6,300

6,500 20,120 24,320

Interest

3,980 3,810 5,150

1,870 5,510 4,600 5,200

4,279 14,810 19,589

Other Income

390

240

200

210

670

250

1,040

1,420

Exch. difference on trade rec./payable

920 -320

2,650 -1,280

3,310 -1,280

PBT before EO expense

8,470 6,940 11,120 11,430 9,010 8,243 11,702 13,239 37,960 42,195

Extra-Ord expense

4,120 3,050

750

1,710 1,000

9,630

1,000

PBT

4,350 3,890 10,370

9,720 8,010 8,243 11,702 13,239 28,330 41,195

Tax

770

990 1,990

2,110 1,430 2,143 2,457

2,913

5,860

8,943

Rate (%)

17.7 25.4 19.2

21.7 17.9 26.0 21.0

22.0

20.7

21.7

MI & P/L of Asso. Cos.

730

440 1,370

1,440 1,070

502 1,572

1,668

3,980

4,811

Reported PAT

2,850 2,460 7,010

6,170 5,510 5,598 7,673

8,659 18,490 27,440

Adj PAT

5,880 5,208 8,233

8,103 6,490 5,598 7,673

8,659 27,423 28,420

YoY Change (%)

5.4 51.5 34.7

-15.0 10.4

7.5

-6.8

6.9

11.2

3.6

Margins (%)

7.4

6.7

9.3

7.3

8.3

6.4

8.1

7.4

7.7

7.5

Note: Adjusted PAT = Reported PAT + forex adjustment + exceptional item

Note that we have excluded the contribution made toward the PM CARES Fund for COVID-19 (of INR750m) from EBITDA and reported it under

exceptional items. This is in addition to exceptional cost of INR250m reported during the quarter (pertaining to litigation, severance, and

restructuring cost from the Arysta Group acquisition).

1 August 2020

UPL

Key Performance Indicators

Y/E March

Consolidated

Sales Growth Split

Volume (%)

Price (%)

Exchange Impact (%)

Cost Break-up

RM Cost (% of sales)

Staff Cost (% of sales)

Other Cost (% of sales)

Gross Margins (%)

EBITDA Margins (%)

EBIT Margins (%)

5.0

1.0

48.9

10.9

19.3

51.1

21.0

15.3

FY20

15.0

-1.0

-3.0

48.5

10.6

20.1

51.5

20.7

14.6

10.0

-1.0

-2.0

49.8

8.2

18.7

50.2

23.3

17.7

29.0

-2.0

56.1

8.7

15.8

43.9

19.5

14.1

0.0

-1.0

0.0

45.3

11.1

20.9

54.7

22.7

16.0

49.0

10.1

19.3

51.0

21.6

14.4

49.0

9.0

17.9

51.0

24.1

17.5

52.0

8.2

19.4

48.0

20.4

14.8

FY21

2QE

3QE

4QE

FY20

FY21

16.0

-1.0

-2.0

51.3

9.5

18.2

48.7

21.0

15.4

12.0

-6.4

0.0

49.2

9.4

19.3

50.8

22.1

15.7

Key exhibits

Exhibit 1: Quarterly revenue trend

Revenue (INRm)

49.8%

Growth %

91.2% 83.6% 80.7%

30.7%

Exhibit 2: Quarterly EBITDA trend

EBITDA (INRm)

20.5% 19.7% 20.6% 21.7% 21.0% 20.7%

-0.9%

Margin %

23.3%

19.5%

22.7%

11.0% 12.9% 17.3%

Source: Company, MOFSL

Exhibit 3: Quarterly adj. PAT trend

Adj. PAT (INRm)

51.5%

12.4% 6.0%

24.8%

-3.0%

5.4%

Growth %

34.7%

10.4%

-15.0%

Exhibit 4: Quarterly and annual growth breakup

Volume Growth (%)

Price Growth (%)

Exchange Growth (%)

-1

-3

-1

-2

-1

-2

-1%

Source: Company, MOFSL

1 August 2020

UPL

Exhibit 5: Quarterly revenue trend – India

Revenue (INRm)

11.6% 8.0%

-20.8%

6.7%

-8.0%

Growth (%)

6.0%

42.0%

5.0%

Exhibit 6: Quarterly revenue trend – LATAM

Revenue (INRm)

25.8% 26.5% 25.9% 25.0% 24.0%

-8.0%

17.2%

Growth (%)

21.0%

25.0%

18.0%

Source: Company, MOFSL

Exhibit 7: Quarterly revenue trend – Europe

Revenue (INRm)

36.6%

10.8%

1.1%

17.9%

-3.0% 1.0%

-27.0%

Growth (%)

Exhibit 8: Quarterly revenue trend – RoW

Revenue (INRm)

12.7%

3.0% -3.0%

5.5% 5.9%

2.1%

7.0%

-4.0%

Growth (%)

7.0% 8.0% 7.0%

Source: Company, MOFSL

Exhibit 9: Quarterly revenue trend – North America

Revenue (INRm)

8.5%

21.5%

2.3%

13.5%

6.0%

Growth (%)

-1.0%

5.0%

-12.0%

6.0%

Above charts includes Arysta numbers; Source: Company, MOFSL

Exhibit 10: Revenue development by region

Revenue Growth (%)

27%

10%

-16%

Latin America

Europe

RoW

-14%

North America

India

Source: Company, MOFSL

1 August 2020

UPL

Exhibit 11: Cost and revenue synergy targets and achievements

Source: Company, MOFSL

Exhibit 12: Working capital analysis

Source: Company, MOFSL

1 August 2020

UPL

Exhibit 13: Cash flow statement (1st April 2020 to 30th June 2020)

Source: Company, MOFSL

Conference call highlights

Latin America



Good agronomic conditions across most of LATAM, with an increase reported in

soya and corn acreages, are expected to complement performance in FY21.

Expect the business to do well in FY21 as it has a lot of orders in this region. At

the current exchange rate, farmers are making good margins. A product to cure

the Asian Rust disease would be launched in LATAM, where the company has a

market of USD1.5b+. The region is expected to do well overall. Expect 2Q to

offset the exchange fluctuation.

UPLL plans to increase prices in local currencies to gradually compensate for the

significant devaluation, especially in the Brazilian real.

Strong currency fluctuations have led to the postponement of orders in Brazil

from 1QFY21 to later in the year. Furthermore, the trade war between the US

and China is expected to be a tailwind in the medium term.

COVID-19-related supply chain delays have shifted sales demand from 1QFY21

to 2QFY21.

Devaluation in the Brazilian real led to the postponement of orders from

1QFY21 to later quarters. The Brazilian currency devalued to 5.17 BRL/USD on

July 30

from 4.02 BRL/USD on Jan 1

. The company is increasing prices across

geographies to recover lost revenue due to the drastic currency fluctuation.

North America



COVID-19-related pre-buying at the end of 4QFY20 impacted revenues in

1QFY21.

It is well-positioned to capitalize on glufosinate demand growth in the US.

1 August 2020

UPL



In 4Q, pre-buying was witnessed due to the pandemic. North America is

expected to do well in FY21, particularly in the Fungicide and Herbicide markets.

Europe



Dry weather in Western Europe affected herbicide sales. However, Europe, like

North America, is expected to do well in FY21; Europe also has higher margins

v/s other regions.

A good herbicide campaign in Northern Europe has aided growth.

Robust crop prices were reported in Russia and Central Europe due to lower

yield.

The impact of shipping and supply chain delays is resulting in a revenue shift to

2Q.

South Europe experienced a challenging 1Q, primarily in Spain, France, and Italy,

due to COVID-19 uncertainties.

India



The Branded business grew 36%, with strong performance posted in Insecticides

and Herbicides.

Despite the COVID-19 impact in the region, India recorded collections in

1QFY21.

RoW



Strong business growth was seen in Southeast Asia, primarily due to the return

of rains and synergies.

Demand is recovering to pre-COVID-19 levels.

Higher growth is expected in Vietnam from increased herbicides sales.

Comments on financials



Net debt was maintained at Mar’20 levels of INR220b.

Cost synergies

stood at USD11m (INR0.8b) in 1QFY21; on a cumulative basis,

synergies amounted to USD120m in 1QFY21.

Revenue synergies

stood at USD7m (INR0.5b) in 1QFY21; cumulative synergies

reached USD247m at the end of 1QFY21 (three-year guidance is USD350m).

Working capital:

The procurement team extended payables by 15 days and is

expected to maintain the trend throughout the year. Receivables stood at

INR60b as of June’20, down from INR69.7b in Mar’20.

CFO

stood at INR19b as of 1QFY21. Borrowings raised during the quarter stood

at INR38.3b. This was including INR37.8b in a new bond issuance (10-yr dollar-

denominated) to buy back the five-year bond, due to mature in Oct’21.

Debt:

Gross debt was INR325b as of Jun’20 v/s INR288b in Mar’20. Net debt was

at INR220b as of June’20 (similar to March levels). Furthermore, the company is

maintaining high cash levels (instead of repaying debt) to counter issues related

to the global pandemic. Also, cost of borrowings is not very high.

Opening gross debt as of 1

April was INR288b, and corresponding cash was

INR67.5b. Gross debt stood at INR325.9b as of June’20, and cash was INR104.6b.

Leverage ratio:

It aims to reduce net debt to EBITDA to 2x by the end of FY21. It

also targets reducing net debt by USD500m in FY21.

1 August 2020

UPL



Guidance:

Expect revenue growth to be range-bound at 6–8% and EBITDA

growth at 10–12% in FY21 (in normal case scenario).

Others highlights



Net working capital days significantly improved by 31 days to 84 days in 1QFY21,

v/s 115 days in 1QFY20, on account of higher payable days.

Reduced operating cost:

Operating cost was down by INR600m YoY –

manpower cost was down (due to a reduction in redundancy), travel cost

declined, consulting contracts (postponed or terminated) were reviewed, and

SG&A saw modest reduction. Fixed cost declined 8% YoY. Fixed cost reduction

was well ahead of plan, capitalizing on COVID-19 contingency plans.

Manufacturing:

It is seeing robust demand in manufacturing. All capacities are

operating at near full capacity.

Product mix:

It is seeing good margins in India. Gross margin improvement is

ascribed to an improvement in the product mix and geography mix. The focus

would be on high-margin products rather than volumes.

Post-synergies, UPLL has emerged as the number-one player in Mexico,

Columbia, etc. The merger has also helped establish a strong footprint.

Valuation



UPLL’s key markets witnessed revenue impact in 1QFY21 due to supply chain

issues, pre-buying in 4QFY20 (North America), and postponement of demand

(Latin America). On the other hand, strong performance was witnessed in India

and RoW. However, the 1QFY21 EBITDA margin expanded due to gross margin

expansion and synergy benefit.

Debt remains a key concern, in our view. During the quarter, the company

raised INR37.8b by issuing a 10-year bond, whereas it made a repayment of

INR6.2b toward a five-year bond in the tender offer. Thus, gross debt increased

to INR325b (as of Jun’20) v/s INR288b (in Mar’20); however, net debt stood flat

QoQ at INR220b.

Notably, UPLL currently has a cash balance of INR105b as the management has

taken a conscious call to hold cash instead of repaying debt to counter issues

related to the global pandemic.

We reduce our earnings estimates by 8%/6% for FY21/FY22, factoring lower-

than-expected earnings and moderation in growth in Latin America and North

America.

Expect revenue/EBITDA/PAT CAGR of 7%/11%/11% over FY20–22E. We value

the stock at 12x FY22E EPS and arrive at TP of INR527. Maintain

Neutral.

1 August 2020

UPL

Exhibit 14: One-year fwd PE trend

P/E (x)

24.0

19.4

17.0

10.0

3.0

16.5

12.7

8.8

5.8

Avg (x)

Max (x)

Min (x)

+1SD

-1SD

10.9

Source: MOFSL

Exhibit 15: Change in estimates

Particulars

(INR m)

Revenue

EBITDA

Adj. PAT

Old

FY21E

3,93,240

86,813

30,917

FY22E

4,30,095

96,771

35,603

New

FY21E

3,77,507

83,404

28,420

FY22E

4,11,455

92,577

33,586

Change

FY21E

FY22E

-4%

-8%

-6%

Source: MOFSL

1 August 2020

UPL

Story in charts

Exhibit 16: Expect revenue CAGR of 7% over FY20–22E

Revenue (INRb)

Growth (%)

63.7

18.6

16.2

16.1

25.7

6.5

173.8

FY18

218.4

FY19

357.6

FY20

5.6

377.5

FY21E

9.0

19.8

Exhibit 17: Margin to expand 150bp over FY20–22E

EBITDA (INRb)

20.2

20.9

Margin (%)

21.0

22.1

22.5

140.5

FY16

163.1

FY17

411.5

FY22E

26.2

FY16

32.2

FY17

35.2

FY18

45.5

FY19

75.2

FY20

83.4

FY21E

92.6

FY22E

Source: Company, MOFSL

Exhibit 18: Expect adj. PAT CAGR of 11% over FY20–22E

57.7

Adj. PAT (INRb)

Growth (%)

Exhibit 19: Return ratios trend

RoE (%)

21.7

19.2

31.4

26.8

22.5

11.6

9.7

20.6

17.7

FY16

FY17

FY18

FY19

FY20

16.3

FY21E

16.9

FY22E

9.7

10.8

19.5

RoCE (%)

6.2

(9.7)

13.2

FY16

20.9

FY17

22.2

FY18

11.3

11.2

18.2

3.6

24.7

FY19

27.4

FY20

28.4

FY21E

33.6

FY22E

Source: Company, MOFSL

Exhibit 20: Net D/E to improve (x)

Net D/E

1.8

1.5

1.2

0.9

0.7

0.4

0.5

0.4

FY15

FY16

FY17

FY18

FY19

FY20

FY21E

FY22E

Source: Company, MOFSL

1 August 2020

UPL

Financials and valuations

Consolidated - Income Statement

Y/E March

Total Income from Operations

Change (%)

Total Expenditure

% of Sales

EBITDA

Margin (%)

Depreciation

EBIT

Int. and Finance Charges

Other Income

Exchange diff on trade rec. & payables

PBT bef. EO Exp.

EO Items

PBT after EO Exp.

Total Tax

Tax Rate (%)

Prior Period Items - Income / (Expenses) - Net

Share of (profit)/loss of ass. & JV

Minority Interest

Reported PAT

Adjusted PAT

Change (%)

Margin (%)

FY16

1,40,480

16.2

1,14,300

81.4

26,180

18.6

6,760

19,420

7,040

3,160

2,230

13,310

1,290

12,020

1,650

13.7

850

120

9,400

13,238

-9.7

9.4

FY17

1,63,120

16.1

1,30,890

80.2

32,230

19.8

6,720

25,510

7,350

4,440

2,380

20,220

810

19,410

1,890

9.7

190

17,270

20,878

57.7

12.8

FY18

1,73,780

6.5

1,38,620

79.8

35,160

20.2

6,750

28,410

7,830

4,140

110

24,610

630

23,980

2,750

11.5

930

20,220

22,163

6.2

12.8

FY19

2,18,370

25.7

1,72,830

79.1

45,540

20.9

8,800

36,740

9,630

2,400

2,990

26,520

8,930

17,590

1,980

11.3

-140

840

14,910

24,658

11.3

FY20

3,57,560

63.7

2,82,400

79.0

75,160

21.0

20,120

55,040

14,810

1,040

3,310

37,960

9,630

28,330

5,860

20.7

-30

4,010

18,490

27,423

11.2

7.7

FY21E

3,77,507

5.6

2,94,104

77.9

83,404

22.1

24,320

59,084

19,589

1,420

-1,280

42,195

1,000

41,195

8,943

21.7

-27

4,838

27,440

28,420

3.6

7.5

(INR Million)

FY22E

4,11,455

9.0

3,18,877

77.5

92,577

22.5

26,008

66,570

17,879

1,440

50,131

10,527

21.0

-30

6,048

33,586

18.2

8.2

Consolidated - Balance Sheet

Y/E March

Equity Share Capital

Total Reserves

Net Worth

Minority Interest

Total Loans

Perpetual bonds

Total Loans (Including Perpetual bond)

Deferred Tax Liabilities

Capital Employed

Gross Block

Less: Accum. Deprn.

Net Fixed Assets

Goodwill on Consolidation

Capital WIP

Total Investments

Curr. Assets, Loans&Adv.

Inventory

Account Receivables

Cash and Bank Balance

Loans and Advances

Curr. Liability & Prov.

Account Payables

Other Current Liabilities

Provisions

Net Current Assets

Appl. of Funds

FY16

860

20,060

58,890

440

52,580

-3,900

1,08,010

93,150

58,700

34,450

4,170

4,840

3,350

1,17,980

37,870

51,000

11,890

17,220

56,780

39,620

16,120

1,040

61,200

1,08,010

FY17

1,010

72,140

73,970

330

63,610

-5,010

1,32,900

96,060

59,540

36,520

4,190

7,920

3,780

1,44,700

41,560

56,560

28,950

17,630

64,210

48,850

14,270

1,090

80,490

1,32,900

FY18

1,020

90,670

91,690

190

66,380

-4,410

1,53,850

1,06,340

66,290

40,050

4,320

13,190

10,340

1,57,240

45,380

60,570

28,940

22,350

71,290

56,750

13,430

1,110

85,950

1,53,850

FY19

1,020

1,46,130

1,47,150

34,540

2,91,360

21,970

4,95,020

2,30,310

75,090

1,55,220

1,66,270

18,550

7,080

2,84,540

91,330

1,16,790

28,510

47,910

1,36,640

94,230

33,770

8,640

1,47,900

4,95,020

FY20

1,530

1,61,430

1,62,960

33,120

2,88,120

29,860

3,17,980

27,770

5,41,830

2,59,590

95,210

1,64,380

1,82,410

20,730

5,580

3,27,730

78,500

1,18,670

67,520

63,040

1,59,000

1,02,330

55,320

1,350

1,68,730

5,41,830

FY21E

1,530

1,83,382

1,84,912

37,958

2,78,120

29,860

3,07,980

27,770

5,58,620

2,86,174

1,19,530

1,66,644

1,82,410

14,146

5,580

3,55,123

79,315

1,25,146

82,711

67,951

1,65,283

1,06,770

56,626

1,888

1,89,840

5,58,620

(INR Million)

FY22E

1,530

2,10,251

2,11,781

44,006

2,58,120

29,860

2,87,980

27,770

5,71,536

3,07,491

1,45,538

1,61,953

1,82,410

12,829

5,580

3,93,270

89,686

1,36,400

89,008

78,176

1,84,506

1,20,731

61,718

2,057

2,08,764

5,71,536

1 August 2020

UPL

Financials and valuations

Ratios

Y/E March

Basic (INR)

EPS

Cash EPS

BV/Share

DPS

Payout (%)

Valuation (x)

P/E

Cash P/E

P/BV

EV/Sales

EV/EBITDA

Dividend Yield (%)

FCF per share

Return Ratios (%)

RoE

RoCE

RoIC

Working Capital Ratios

Fixed Asset Turnover (x)

Inventory (Days)

Debtor (Days)

Creditor (Days)

Leverage Ratio (x)

Net Debt (incl perpetual bonds)/Equity

FY16

17.3

26.1

77.0

5.0

40.7

27.6

18.3

6.2

2.9

15.5

1.0

9.2

22.5

19.2

21.4

1.5

204

133

213

0.7

FY17

27.3

36.1

96.7

7.0

31.0

17.5

13.3

4.9

2.5

12.4

1.5

24.1

31.4

21.7

25.7

1.7

194

127

228

0.5

FY18

29.0

37.8

119.9

5.3

20.0

16.5

12.7

4.0

2.3

11.5

1.1

19.2

26.8

19.5

26.1

1.6

204

127

255

0.4

FY19

32.2

43.7

192.4

5.3

27.1

14.8

10.9

2.5

2.9

13.8

1.1

-350.0

20.6

11.6

12.0

0.9

319

195

329

1.8

FY20

35.8

62.1

213.0

6.0

24.8

13.3

7.7

2.2

1.7

8.2

1.3

53.0

17.7

9.7

9.8

1.4

156

121

204

1.5

FY21E

37.2

68.9

241.7

7.2

20.0

12.9

6.9

2.0

1.6

7.1

1.5

65.7

16.3

9.7

10.2

1.3

156

121

210

1.2

FY22E

43.9

118.0

419.4

8.8

20.0

10.9

4.1

1.1

1.4

6.1

1.8

66.5

16.9

10.8

11.4

1.3

156

121

210

0.9

Consolidated - Cash Flow Statement

Y/E March

OP/(Loss) before Tax

Depreciation

Interest & Finance Charges

Direct Taxes Paid

(Inc)/Dec in WC

CF from Operations

Others

CF from Operating incl EO

(Inc)/Dec in FA

Free Cash Flow

(Pur)/Sale of Investments

Others

CF from Investments

Issue of Shares

Inc/(Dec) in Debt

Interest Paid

Dividend Paid

Others

CF from Fin. Activity

Inc/Dec of Cash

Opening Balance

Closing Balance

FY16

13,310

6,760

6,350

-5,030

-7,040

14,350

-390

13,960

-6,930

7,030

800

-10,728

-16,858

12,840

-5,860

-2,290

4,690

1,792

10,098

11,890

FY17

20,220

6,720

5,850

-4,040

-1,210

27,540

-850

26,690

-8,270

18,420

120

-2,040

-10,190

10,790

-7,950

-2,280

560

17,060

11,890

28,950

FY18

24,610

6,750

7,830

-2,750

-5,470

30,970

-630

30,340

-15,680

14,660

-6,560

2,810

-19,430

-810

2,770

-7,830

-4,040

-1,010

-10,920

-10

28,950

28,940

FY19

26,520

8,800

9,630

-1,980

-10,480

32,490

-8,930

23,560

-2,91,280

-2,67,720

3,260

-21,180

-3,09,200

2,24,980

-9,630

-4,040

73,900

2,85,210

-430

28,940

28,510

FY20

37,960

20,120

14,810

-5,860

30,710

97,740

-9,630

88,110

-47,600

40,510

1,500

19,670

-26,430

510

-3,240

-14,810

-4,590

-540

-22,670

39,010

28,510

67,520

FY21E

42,195

24,320

19,589

-8,943

-5,919

71,241

-1,000

70,241

-20,000

50,241

-20,000

-10,000

-19,589

-5,488

-35,050

15,191

67,520

82,711

(INR Million)

FY22E

50,131

26,008

17,879

-10,527

-12,627

70,863

-20,000

50,863

-20,000

-17,879

-6,717

-44,566

6,297

82,711

89,008

1 August 2020

UPL

Explanation of Investment Rating

Investment Rating

Expected return (over 12-month)

BUY

>=15%

SELL

< - 10%

NEUTRAL

< - 10 % to 15%

UNDER REVIEW

Rating may undergo a change

NOT RATED

We have forward looking estimates for the stock but we refrain from assigning recommendation

*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within

following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.

Disclosures

The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).

Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the

Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial

products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are

available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a

registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and

National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National

Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance

Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.

Details of associate entities of Motilal Oswal Financial Services Limited are

available on the website at

http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf

MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and

buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other

compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have

any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the

specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even

though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report

MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report

should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific

merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the

website at

https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx

A graph of daily closing prices of securities is available at

www.nseindia.com, www.bseindia.com.

Research Analyst views on Subject Company may vary based on Fundamental

research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated

from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.

Regional Disclosures (outside India)

This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability

or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.

For Hong Kong:

This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong

Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst

Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of

research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity

to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these

securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not

located in Hong Kong & are not conducting Research Analysis in Hong Kong.

For U.S.

Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under

applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers

Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any

brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is

intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as

"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which

this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration

provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange

Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-

dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this

chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.

registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public

appearances and trading securities held by a research analyst account.

For Singapore

In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets

services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and

Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL

in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,

of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the

SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and

inform MOCMSPL.

Specific Disclosures

1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.

2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company

3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months

4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report

5 Research Analyst has not served as director/officer/employee in the subject company

6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months

8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months

9 MOFSL has not received any compensation or other benefits from third party in connection with the research report

10 MOFSL has not engaged in market making activity for the subject company

1 August 2020

UPL

********************************************************************************************************************************

The associates of MOFSL may have:

- financial interest in the subject company

- actual/beneficial ownership of 1% or more securities in the subject company

- received compensation/other benefits from the subject company in the past 12 months

- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the

specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even

though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.

- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the

company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)

- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.

The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report

Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not

consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from

clients which are not considered in above disclosures.

Analyst Certification

The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the

research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

Terms & Conditions:

This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and

may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent

of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in

nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,

representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The

report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial

instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as

customers by virtue of their receiving this report.

Disclaimer:

The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or

distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for

informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing

in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.

The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment

objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this

document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this

document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views

expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade

securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of

the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and

should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make

modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from

time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to

perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a

separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of

information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or

may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,

directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or

entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,

regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in

all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.

Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost

revenue or lost profits that may arise from or in connection with the use of the information.

The person accessing this information specifically agrees to exempt MOFSL or any of its

affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such

misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,

expenses that may be suffered by the person

accessing this information due to any errors and delays.

Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;

Website

www.motilaloswal.com.CIN

no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,

Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.

Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:

INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company

Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth

Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is

a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.

Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.

Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no

assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance

Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.

* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National

Company Law Tribunal, Mumbai Bench.

1 August 2020