31 January 2021
UPL
3QFY21 Results Update | Sector: Agri
UPL
Estimate change
TP change
Rating change
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
2021E 2022E
Sales
378.7
411.8
EBITDA
82.3
92.6
PAT
31.7
37.5
EBITDA (%)
21.7
22.5
EPS (INR)
41.4
49.0
EPS Gr. (%)
19.0
18.2
BV/Sh. (INR)
241
425
Ratios
Net D/E
1.3
1.0
RoE (%)
18.2
18.8
RoCE (%)
10.6
11.3
Payout (%)
20.0
20.0
Valuations
P/E (x)
13.5
11.4
EV/EBITDA (x)
8.2
7.0
Div Yield (%)
1.3
1.7
FCF Yield (%)
6.5
11.2
CMP: INR560
TP: INR574 (+2%)
Neutral
LatAm impacted by a delayed season
Sales/EBITDA below our estimate, adjusted PAT in line
UPLL IN
765
428 / 5.9
601 / 240
26/0/-9
3327
In 3QFY21, UPLL’s revenue growth was driven by Europe and India markets,
while Latin America saw a decline. Gross margin expanded due to price
increase, COGS savings, synergies, and sales of higher margin products.
Adjusted PAT growth was aided by a lower tax rate and higher other income.
We maintain our FY21E/FY22E/FY23E earnings estimate as adjusted PAT
came in line with our expectation. Its high debt remains a key concern for
the stock. Maintain
Neutral.
2023E
443.4
102.0
43.9
23.0
57.4
17.2
495
0.8
18.9
12.3
20.0
9.8
6.1
2.0
12.8
Shareholding pattern (%)
Promoter
DII
FII
Others
Dec-20 Sep-20 Dec-19
27.9
27.9
27.9
16.7
16.2
11.5
35.3
37.2
43.5
20.2
18.7
17.2
Note: FII includes depository receipts
Europe and India aids revenue growth
Revenue rose 3% YoY to INR91.3b (v/s our estimate of INR99.5b) in 3QFY21
(volume: +7%, price: +1% and exchange impact: -5%). Gross margin grew
470bp YoY to 54.9% due to price hikes, COGS savings, synergies, and sales of
higher margin differentiated and sustainable solutions. EBITDA margin
expanded 90bp YoY to 24.2%. EBITDA grew 7% YoY to INR22b (v/s our
estimate of INR23.6b).
Adjusted PAT was up 14% YoY to INR9.4b (v/s our estimate of INR9.1b). In
9MFY21, revenue/EBITDA/adjusted PAT grew 5%/10%/22% YoY.
Europe
region grew 30% YoY on: i) strong growth led by Poland, Benelux,
Ukraine, Italy, and Spain, ii) strong demand from the newly launched Argos,
which is used to stop sprouting in stored potatoes, and iii) launching
alternatives to the gaps created by banned products.
UPLL reported strong (21% YoY) revenue growth in
India
on good herbicide
sales in resistant Phalaris infested wheat acres of North India and volume
growth in Ferio and Sweep Power (both are non-selective post emergent
herbicides for cotton and tea).
Revenue fell 8% YoY in
LatAm
due to drought in Brazil/Argentina, which
delayed planting and currency devaluation in Brazil. Outlook for 4QFY21
remains positive due to spillover demand, higher commodity prices, and
recent rains.
North America:
Revenue grew 5% YoY, driven by: i) gains in market share, ii)
good weather conditions, iii) increased demand for Glufosinate, and iv)
strong growth across multiple products (Vigilant, Everest, Manzate, and
Interline).
RoW
growth of 6% YoY is attributed to normalized season and continued
higher demand for Glufosinate. A favorable season led to double-digit
growth in Africa, Australia, and New Zealand.
Sumant Kumar - Research Analyst
(Sumant.Kumar@MotilalOswal.com)
Research Analyst: 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.
 Motilal Oswal Financial Services
UPL
Highlights from the management commentary
Ban of Mancozeb in EU:
For UPLL, the overall share of Mancozeb from the
Europe region is very low as a percentage of overall Mancozeb sales across the
globe. It has enough products in the pipeline to replace Mancozeb.
Capex:
It plans to incur INR17.5b on capex, of this INR15.7b has already been
incurred.
The management has maintained its guidance of 6-8% revenue growth and 10-
12% EBITDA growth, which would be driven by a focus on differentiated
solutions as well as new product launches. Price increases in local currencies
and cost savings will support margin. COGS savings, synergies, and further price
increases in local currencies would support margin improvement.
Valuation and view
UPLL reported revenue growth of 3% YoY, led by strong growth in Europe and
India. It witnessed single-digit growth in RoW and NA during 3QFY21. Revenue
from LatAm declined 8% YoY. Higher gross margin and operating leverage led to
EBITDA growth of 7% YoY.
In its 2QFY21 conference call, the management guided at reducing debt by
USD700m in 2HFY21. Of this, USD410m of debt has been repaid as on 28
Dec’20. The debt repayment was from its cash balance of INR80b as of Sep’20 as
CFO from 1HFY21 was a mere INR1.4b. The
cash balance is aided by issuance of
USD denominated senior notes of USD500m in Jun’20.
The company has to repay loans worth USD161m (INR11.8b, assuming a
USD:INR conversion rate of 73) by the end of FY21.
It has a current cash balance of INR35.9b as of Dec’20. Thus, cash generation in
4QFY21 would stand critical for debt repayment (in 9MFY21, it generated CFO of
INR5.5b).
Debt repayment and cash generation would stand as a key trigger to watch out
for going forward.
The stock has traded at an average P/E of 13.5x over the last three years on a
one-year forward basis. However, we have ascribed 10x P/E (~25% discount to
its three-year average) as the high debt is a key concern for the company.
We maintain our FY21E/FY22E/FY23E earnings estimates as adjusted PAT was in
line with our estimates.
Maintain
Neutral
with a TP of INR574/share.
31 January 2021
2
 Motilal Oswal Financial Services
UPL
Cons.: Quarterly Earning Model (Incl-Arysta)
Y/E March
1Q
79,060
91.2
62,480
16,580
21.0
4,460
3,980
390
FY20
2Q
3Q
4Q
78,170 88,920 1,11,410
83.6
80.7
30.7
62,760 68,220 89,720
15,410 20,700 21,690
19.7
23.3
19.5
4,760
4,950
5,950
3,810
5,150
1,870
240
200
210
1Q
78,330
-0.9
60,540
17,790
22.7
5,220
5,510
670
FY21
FY20
FY21
2Q
3Q
4QE
89,390 91,260 1,19,715 3,57,560 3,78,695
14.4
2.6
7.5
63.7
5.9
71,310 69,180 95,397 2,83,180 2,96,427
18,080 22,080 24,318 74,380 82,268
20.2
24.2
20.3
20.8
21.7
5,330
5,420
6,200 20,120 22,170
3,430
7,450
4,500 14,810 20,890
750
670
250
1,040 2,340
1,410
8,660
2,110
6,550
1,120
17.1
800
4,630
6,653
50.4
7.4
60
9,820
-780
10,600
1,090
10.3
1,570
7,940
9,405
14.2
10.3
0
13,868
0
13,868
3,051
22.0
1,668
9,150
9,150
12.9
7.6
3,310
37,180
9,650
27,530
5,860
21.3
3,980
17,690
26,638
8.0
7.4
Net Sales
YoY Change (%)
Total Expenditure
EBITDA
Margins (%)
Depreciation
Interest
Other Income
Exch. diff. on trade
rec./payable
60
920
-320
2,650 -1,280
PBT before EO expense
8,470
6,160 11,120 11,430
9,010
Extra-Ord expense
4,120
3,070
750
1,710
1,000
PBT
4,350
3,090 10,370
9,720
8,010
Tax
770
990
1,990
2,110
1,430
Rate (%)
17.7
32.0
19.2
21.7
17.9
MI & P/L of Asso. Cos.
730
440
1,370
1,440
1,070
Reported PAT
2,850
1,660
7,010
6,170
5,510
Adj PAT
5,880
4,423
8,233
8,103
6,490
YoY Change (%)
5.4
28.7
34.7
-15.0
10.4
Margins (%)
7.4
5.7
9.3
7.3
8.3
Note: Adjusted PAT = Reported PAT + forex adjustment + exceptional item
(INR M)
FY21 Var
3QE %
99,497 -8%
11.9
75,916
23,581 -6%
23.7
5,500
5,000
250
190
0
41,358 13,331
2,330
0
39,028 13,331
6,691 2,666
17.1
20.0
5,108 1,572
27,230 9,093
31,697 9,093
19.0
10.5
8.4
9.1
3%
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 (%)
FY20
1Q
5.0
1.0
1.0
48.9
10.9
19.3
51.1
21.0
15.3
2Q
15.0
-1.0
-3.0
49.4
10.6
20.2
50.6
19.7
13.6
3Q
10.0
-1.0
-2.0
49.8
8.2
18.7
50.2
23.3
17.7
4Q
29.0
-2.0
-2.0
56.1
8.7
15.8
43.9
19.5
14.1
1Q
0.0
-1.0
0.0
45.3
11.1
20.9
54.7
22.7
16.0
2Q
19.0
-1.0
-4.0
50.4
10.3
19.0
49.6
20.2
14.3
FY21
3Q
7.0
1.0
-5.0
45.1
10.4
20.3
54.9
24.2
18.3
52.0
8.2
19.5
48.0
20.3
15.1
4QE
16.0
-1.0
-2.0
51.5
9.5
18.3
48.5
20.8
15.2
12.0
-6.1
0.0
48.6
9.8
19.8
51.4
21.7
15.9
FY20
FY21
31 January 2021
3
 Motilal Oswal Financial Services
UPL
Key exhibits
Exhibit 1: Quarterly revenue trend
Revenue (INRm)
12.9% 17.3%
49.8% 91.2%
83.6% 80.7%
30.7%
Growth %
20.6%
Exhibit 2: Quarterly EBITDA trend
EBITDA (INRm)
Margin %
24.2%
19.5%
20.2%
22.7%
23.3%
21.0%
21.7%
-0.9%
14.4% 2.6%
19.7%
19.7%
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 3: Quarterly adjusted PAT trend
Adj. PAT (INRm)
24.8%
6.0%
-3.0%
Growth %
28.7% 34.7%
10.4%
-15.0%
50.4%
14.2%
Exhibit 4: Quarterly and annual growth break-up
Volume Growth (%)
45%
30%
15%
0%
Price Growth (%)
Exchange Growth (%)
5.4%
-15%
FY19
Source: Company, MOFSL
FY20
FY21
Source: Company, MOFSL
Exhibit 5: Quarterly revenue trend – India
Revenue (INRm)
41%
36%
6%
-8%
Growth (%)
Exhibit 6: Quarterly revenue trend – LatAm
Revenue (INRm)
27%
24%
21%
Growth (%)
25%
27%
18%
21%
12%
-8%
-16%
Source: Company, MOFSL
Source: Company, MOFSL
31 January 2021
4
 Motilal Oswal Financial Services
UPL
Exhibit 7: Quarterly revenue trend – Europe
Revenue (INRm)
Growth (%)
-2%
-18%
1%
30%
Exhibit 8: Quarterly revenue trend – RoW
Revenue (INRm)
33%
3%
-14%
2%
10%
Growth (%)
27%
6%
0%
7%
6%
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 9: Quarterly revenue trend – North America
Revenue (INRm)
Growth (%)
45%
6%
13%
-12%
-14%
9%
5%
Above charts includes Arysta numbers; Source: Company, MOFSL
Exhibit 10: Revenue growth by region
30%
Revenue Growth (%)
21%
6%
5%
-8%
Latin America
Europe
RoW
North America
India
Source: Company, MOFSL
31 January 2021
5
 Motilal Oswal Financial Services
UPL
Exhibit 11: Cost and revenue synergy targets and achievements
Source: Company, MOFSL
Exhibit 12: Working capital analysis
Source: Company, MOFSL
31 January 2021
6
 Motilal Oswal Financial Services
UPL
Exhibit 13: Cash flow statement (1 Apr’20 to 31 Dec’20)
Source: Company, MOFSL
Exhibit 14: Gross and net debt movement
Gross Debt (INRb)
Net Debt (INRb)
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
It excludes perpetual debt of USD400m issued by the company.
Source: Company, MOFSL
Highlights from the conference call
Latin America (LatAm)
Drought in Brazil delayed planting, which led to lower LatAm sales, despite the
company having several orders in hand. Due to lower plantation of soya bean,
crop prices have jumped sharply.
Across the board currency devaluation in LatAm countries was partially offset by
pricing actions. Excluding foreign exchange loss in Brazil, growth was stable in
the region. Going forward, Brazil is expected to perform better as the
management expects a good recovery in the region.
Improved mix driven by strong sales of differentiated and sustainable solutions
and moderate post-patent growth.
The strong growth was led by Poland, Benelux, Ukraine, Italy, and Spain.
The same was due to launch of new products, namely Argos. The growth was
supported by a favorable exchange rate and gain in market share.
Europe
31 January 2021
7
 Motilal Oswal Financial Services
UPL
The latter is due to its combined portfolio in soya bean, corn, sugarcane, and key
crops in Europe, which led to multiple product offerings in the European region.
Both businesses together have increased cross-selling opportunities and
provided long-term sustainable growth. The management expects the growth
trajectory in Europe to continue going forward.
The company saw good herbicide sales in resistant Phalaris infested wheat acres
of North India.
Strong sales of Ferio and Sweep Power (both are non-selective post emergent
herbicides for cotton and tea) boosted volume growth in 3QFY21.
Excess rains in the South reduced market growth after a very strong 1HFY21.
Double-digit growth in Africa, Australia and New Zealand benefitted from a
normalized season.
The strong growth in Southeast Asia was supported by continued expansion of
Glufosinate in the area.
Accelerated growth in China was driven by volume gains in branded sales and
impact of the Yoloo acquisition.
The strong growth in differentiated and sustainable solutions is driving
improved margin.
The management attributed the increased demand for Glufosinate to robust
ramp-up of resistant-traits in acres.
It saw strong growth in Vigilant, Everest, Manzate, and Interline.
Cost and revenue synergies:
The company achieved revenue and cost synergies
that it guided at the time of acquisition.
Agri-market outlook for
FY22 continues to remain positive as commodity prices
are robust.
RM prices:
Commodity prices (e.g. Methanol, Acetic acid, Ethanol, etc.) have
increased sharply and is expected to be stronger in 4QFY21 and 1QFY22.
However, raw material prices are likely to soften from 2QFY22. The company
has taken appropriate price hikes across its product portfolio.
Capex:
It plans to incur INR17.5b on capex, of this INR15.7b has already been
incurred.
Ban of Mancozeb in EU:
For UPLL, the overall share of Mancozeb from the
Europe region is very low as a percentage of overall Mancozeb sales across the
globe. It has enough products in the pipeline to replace Mancozeb.
UPLL plans to reduce net WC days by another 3-4 days by the end of FY21.
Excise duty:
Exceptional item includes a provision of INR395m, on account of an
unfavorable court order for the industry, pertaining to excise duty liability for
Apr’08 to Dec’13 as UPLL has one manufacturing unit in J&K.
Interest cost:
Finance cost for 3QFY21 stood at INR7.45b, of which INR4.6b is
interest cost. Of this, INR0.75b pertains to interest paid on early payment on
bonds maturing in Oct’21 (one-time cost). Adjusting for pre-payment of debt,
interest cost reduced on a YoY basis. The balance (INR2.9b) is MTM hedges
(which would be reversed going forward) and outstanding contracts.
Cost of selling receivables for UPLL is LIBOR+200bp.
India
RoW
North America
Other highlights
On financials
31 January 2021
8
 Motilal Oswal Financial Services
UPL
Valuation
UPLL reported revenue growth of 3% YoY, led by strong growth in Europe and
India. It witnessed single-digit growth in RoW and NA during 3QFY21. Revenue
from LatAm declined 8% YoY. Higher gross margin and operating leverage led to
EBITDA growth of 7% YoY.
In its 2QFY21 conference call, the management guided at reducing debt by
USD700m in 2HFY21. Of this, USD410m of debt has been repaid as on 28
Dec’20. The debt repayment was from its cash balance of INR80b as of Sep’20 as
CFO from 1HFY21 was a mere INR1.4b. The
cash balance is aided by issuance of
USD denominated senior notes of USD500m in Jun’20.
The company has to repay loans worth USD161m (INR11.8b, assuming a
USD:INR conversion rate of 73) by the end of FY21.
It has a current cash balance of INR35.9b as of Dec’20. Thus, cash generation in
4QFY21 would stand critical for debt repayment (in 9MFY21, it generated CFO of
INR5.5b).
Debt repayment and cash generation would stand as a key trigger to watch out
for going forward.
The stock has traded at an average P/E of 13.5x over the last three years on a
one-year forward basis. However, we have ascribed 10x P/E (~25% discount to
its three-year average) as the high debt is a key concern for the company.
We maintain our FY21E/FY22E/FY23E earnings estimates as adjusted PAT was in
line with our estimates.
Maintain
Neutral
with a TP of INR574/share.
Exhibit 15: One-year forward P/E trend
P/E (x)
24.0
Avg (x)
Max (x)
Min (x)
+1SD
-1SD
19.4
17.0
16.3
12.4
10.0
8.6
5.8
11.0
3.0
Source: MOFSL
Exhibit 16: Change in estimates
Particulars
(INR m)
Revenue
EBITDA
Adj. PAT
FY21E
3,85,744
84,120
32,422
Old
FY22E
4,20,121
94,527
36,199
FY23E
4,52,909
1,04,169
43,033
FY21E
3,78,695
82,268
31,697
New
FY22E
4,11,765
92,647
37,462
FY23E
4,43,356
1,01,972
43,895
FY21E
-2%
-2%
-2%
Change
FY22E
-2%
-2%
3%
FY23E
-2%
-2%
2%
Source: MOFSL
31 January 2021
9
 Motilal Oswal Financial Services
UPL
Story in charts
Exhibit 17: Expect 8% revenue CAGR over FY21-23E
Revenue (INRb)
63.7
18.6
25.7
16.2
16.1
6.5
5.9
8.7
7.7
19.8
20.2
20.9
20.8
21.7
22.5
Growth (%)
Exhibit 18: Margin to expand 130bp over FY21-23E
EBITDA (INRb)
Margin (%)
23.0
140.5
FY16
163.1
FY17
173.8
FY18
218.4
FY19
357.6
FY20
378.7
411.8
443.4
26.2
FY16
32.2
FY17
35.2
FY18
45.5
FY19
74.4
FY20
82.3
92.6
102.0
FY21E FY22E FY23E
Source: Company, MOFSL
FY21E FY22E FY23E
Source: Company, MOFSL
Exhibit 19: Expect 18% adjusted PAT CAGR over FY21-23E
Adj. PAT (INRb)
57.7
Growth (%)
Exhibit 20: Return ratio trend
RoE (%)
21.7
19.2
31.4
26.8
22.5
20.6
11.6
9.5
17.2
FY16
FY17
FY18
FY19
FY20
18.2
18.8
18.9
10.6
11.3
12.3
19.5
RoCE (%)
6.2
(9.7)
13.2
FY16
20.9
FY17
22.2
FY18
11.3
19.0
8.0
18.2
17.2
26.6
31.7
37.5
43.9
24.7
FY19
FY20
FY21E FY22E FY23E
Source: Company, MOFSL
FY21E FY22E FY23E
Source: Company, MOFSL
Exhibit 21: Net D/E to improve (x)
Net D/E
1.8
1.5
1.3
1.0
0.7
0.4
0.5
0.4
0.8
FY15
FY16
FY17
FY18
FY19
FY20
FY21E
FY22E
FY23E
Source: Company, MOFSL
31 January 2021
10
 Motilal Oswal Financial Services
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 (%)
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
60
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
80
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
11.3
FY20
3,57,560
63.7
2,83,180
79.2
74,380
20.8
20,120
54,260
14,810
1,040
3,310
37,180
9,650
27,530
5,860
21.3
-30
4,010
17,690
26,638
8.0
7.4
FY21E
3,78,695
5.9
2,96,427
78.3
82,268
21.7
22,170
60,098
20,890
2,340
190
41,358
2,330
39,028
6,691
17.1
-73
5,181
27,230
31,697
19.0
8.4
FY22E
4,11,765
8.7
3,19,118
77.5
92,647
22.5
24,197
68,450
16,389
2,471
0
54,532
0
54,532
11,452
21.0
-80
5,699
37,462
37,462
18.2
9.1
(INR M)
FY23E
4,43,356
7.7
3,41,384
77.0
1,01,972
23.0
25,955
76,017
15,014
2,527
0
63,530
0
63,530
13,341
21.0
-88
6,382
43,895
43,895
17.2
9.9
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
0
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
0
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
0
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
0
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
1,83,214
1,84,744
38,301
2,78,120
29,860
3,07,980
27,770
5,58,794
2,84,924
1,17,380
1,67,544
1,82,410
12,896
5,580
3,35,985
81,662
1,19,315
59,269
75,739
1,45,621
1,05,858
37,869
1,893
1,90,364
5,58,794
FY22E
1,530
2,13,183
2,14,713
43,999
2,58,120
29,860
2,87,980
27,770
5,74,462
3,05,241
1,41,577
1,63,664
1,82,410
12,579
5,580
3,74,287
93,206
1,35,375
63,353
82,353
1,64,057
1,20,822
41,177
2,059
2,10,229
5,74,462
(INR M)
FY23E
1,530
2,48,299
2,49,829
50,381
2,28,120
29,860
2,57,980
27,770
5,85,961
3,27,804
1,67,532
1,60,273
1,82,410
15,016
5,580
3,99,071
1,00,159
1,45,761
64,480
88,671
1,76,389
1,29,836
44,336
2,217
2,22,682
5,85,961
31 January 2021
11
 Motilal Oswal Financial Services
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
FY17
27.3
36.1
96.7
7.0
31.0
FY18
29.0
37.8
119.9
5.3
20.0
FY19
32.2
43.7
192.4
5.3
27.1
17.4
12.8
2.9
3.2
15.2
0.9
-350.0
22.5
19.2
21.4
1.5
204
133
213
0.7
31.4
21.7
25.7
1.7
194
127
228
0.5
26.8
19.5
26.1
1.6
204
127
255
0.4
20.6
11.6
12.0
0.9
319
195
329
1.8
FY20
34.8
61.1
213.0
6.0
25.9
16.1
9.2
2.6
1.9
9.1
1.1
51.9
17.2
9.5
9.6
1.4
156
121
203
1.5
FY21E
41.4
70.4
241.5
7.1
20.0
13.5
8.0
2.3
1.8
8.2
1.3
36.6
18.2
10.6
10.7
1.3
162
115
210
1.3
FY22E
49.0
122.1
425.2
9.8
20.0
11.4
4.6
1.3
1.6
7.0
1.7
62.6
18.8
11.3
11.1
1.3
162
120
210
1.0
FY23E
57.4
138.3
494.7
11.5
20.0
9.8
4.0
1.1
1.4
6.1
2.0
71.7
18.9
12.3
12.1
1.4
162
120
210
0.8
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
0
12,840
-5,860
-2,290
0
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
0
10,790
-7,950
-2,280
0
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
0
2,24,980
-9,630
-4,040
73,900
2,85,210
-430
28,940
28,510
FY20
37,180
20,120
14,810
-5,860
30,710
96,960
-9,650
87,310
-47,600
39,710
1,500
19,670
-26,430
510
-3,240
-14,810
-4,590
260
-21,870
39,010
28,510
67,520
FY21E
41,358
22,170
20,890
-6,691
-29,885
47,842
-2,330
45,512
-17,500
28,012
0
0
-17,500
0
-10,000
-20,890
-5,446
73
-36,263
-8,251
67,520
59,269
FY22E
54,532
24,197
16,389
-11,452
-15,781
67,885
0
67,885
-20,000
47,885
0
0
-20,000
0
-20,000
-16,389
-7,492
80
-43,801
4,084
59,269
63,353
(INR M)
FY23E
63,530
25,955
15,014
-13,341
-11,327
79,831
0
79,831
-25,000
54,831
0
0
-25,000
0
-30,000
-15,014
-8,779
88
-53,705
1,127
63,353
64,480
31 January 2021
12
 Motilal Oswal Financial Services
UPL
Explanation of Investment Rating
Investment Rating
BUY
SELL
NEUTRAL
UNDER REVIEW
NOT RATED
Expected return (over 12-month)
>=15%
< - 10%
< - 10 % to 15%
Rating may undergo a change
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
********************************************************************************************************************************
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
31 January 2021
13
 Motilal Oswal Financial Services
UPL
-
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.
31 January 2021
14