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.