Initiating Coverage | 27 February 2018
Sector: Agrochemicals
UPL
Reaping growth
Sumant Kumar - Research Analyst
(Sumant.Kumar@motilaloswal.com); +91 22 6129 1569
Aksh Vashishth - Research Analyst
(Aksh.Vashishth@motilaloswal.com); +91 22 6129 1553
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
Contents: UPL | Reaping growth
Summary ............................................................................................................. 3
Offering a complete basket of agro solutions ........................................................ 5
Tapping the generics opportunity ....................................................................... 10
Robust growth across geographies to continue ................................................... 16
Resistance market holds promising growth ......................................................... 23
Focus on brand building to aid margin expansion ................................................ 25
Expect ~14% earnings CAGR over FY18–20 .......................................................... 27
Valuation and view............................................................................................. 29
SWOT analysis .................................................................................................... 31
Bull & Bear case
................................................................................................. 32
Industry overview .............................................................................................. 33
Key risks............................................................................................................. 35
Management overview....................................................................................... 36
Financials and valuations .................................................................................... 37
27 February 2018
2

UPL
Initiating Coverage | Sector: Agrochemicals
UPL
Buy
BSE Sensex
34,346
S&P CNX
10,554
CMP: INR721
TP: INR945(+31%)
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
M.Cap. (INR b)
M.Cap. (USD b)
1, 6, 12 Rel. Per (%)
Avg Val, (INR m)
Free float (%)
UPLL IN
505
902 / 675
364.1
5.6
-1/-23/-18
1220.0
72.2
UPL is the second largest post-patent global player in crop protection. It has evolved
from a crop protection chemicals company into a complete agro solutions provider,
offering seeds, crop protection chemicals, biologicals, soil nutrients and post-harvest
solutions. It is well diversified across geographies, with revenue contribution of 32%
from Latin America, 20% from India, 17% from North America, 13% from Europe, and
18% from Rest of the World.
Reaping growth
Generic pesticides, backward integration to drive profitability
A multitude of products going off-patent would unleash a generics opportunity of
~USD3b over CY17-20. With strong R&D and integrated manufacturing facilities,
UPL is in a sweet spot to grab the impending opportunity in the generics market.
Financial Snapshot (INR b)
Y/E Mar
2018E 2019E 2020E
Sales
175.8 196.1 222.3
EBITDA
35.8
40.7
47.0
NP
21.7
23.8
28.1
EPS (INR)
43.0
47.2
55.6
EPS Gr. (%)
8.9
9.7
17.9
BV/Sh. (INR)
180.7 218.2 262.4
P/E (x)
16.8
15.3
13.0
P/BV (x)
4.0
3.3
2.7
RoE (%)
26.3
23.6
23.1
RoCE (%)
19.3
18.9
19.3
Shareholding pattern (%)
As On
Promoter
DII
FII
Others
Dec-17 Sep-17 Dec-16
27.8
11.5
39.6
21.1
27.9
10.9
40.8
20.5
27.8
9.7
51.9
10.6
The company is also set to benefit from the increasing phenomenon of pest
resistance across crops with its broad array of products, which enables it to
launch new combinations to tackle resistance.
Pest resistance to major agrochemical ‘glyphosate’ (market size of ~USD5b) could
provide UPL with its next key growth driver – its variant, ‘gluphosinate’.
We expect UPL to clock ~12% revenue CAGR and ~14% PAT CAGR over FY18-20
and value the company at 17x FY20E EPS of INR55.6, arriving at a TP of INR945.
Initiate coverage with Buy.
Strong R&D, backward integration to help grab fungicide opportunity
UPL possesses in-house manufacturing expertise, reducing its dependence on
third-party partners. Backward integration enables 70-75% of its manufacturing
to take place in-house (50-55% in India and 20% overseas). It imports 10-15%
from China and Europe (France and UK). Its gross margin was at 53% in FY17
against domestic player average of 43.6% (FY17) and global player average of
35.6% (CY16). The size of the global fungicides market is USD15b (CY17) and its
share in the global agrochemicals market has increased from ~20% in CY00 to
27% in CY17. Given the high growth expected in fungicides, UPL too has aligned
itself with the industry – the contribution of fungicides to its revenue has
increased from 5% in FY03 to 29% in FY17. With just ~4.5% share in the global
fungicides market, UPL has immense growth opportunity in the segment.
Reaping Growth
UPL
Products worth USD3b going off-patent – opportunity unleashed for UPL
Products worth USD3.7b have already gone off-patent over CY15-17. This has
led to a shift from the use of high value patented products to generic
agrochemicals, enabling 16% CAGR for UPL over FY15-17. The multitude of
products going off-patent is expected to create ~USD3b opportunity for the
generics industry over CY17-20. UPL is adept at identifying and registering
products attracting robust demand even after going off-patent and is therefore
expected to leverage the impending opportunity well. The generics opportunity
has been supported by subdued farm income, which should continue, as higher
closing stocks would keep prices of agricultural commodities in check.
3
Sumant Kumar
+
91 22 3078 4702
Sumant.Kumar@motilaloswal.com
Please click here for Video Link
27 February 2018

UPL
‘Gluphosinate’ herbicide likely to be a boon for UPL
In CY14, UPL launched two brands of the herbicide, gluphosinate in the USA for
soybean and corn to fill gaps in its portfolio both from a crop and regional
perspective. One brand,
Lifeline
is targeted at regions outside the Midwest. The
other brand,
Interline
is solely for the Midwest, given the quantum of area under
soybean and corn cultivation in the region. The company has gradually established
presence of gluphosinate in markets across geographies and now competes directly
with glyphosate, the size of which is estimated at ~USD5b. Additionally, glyphosate
has been facing headwinds, as the targeted herbs have gradually developed
resistance against it and the active ingredient is also under evaluation by WHO for
being carcinogenic in nature. Given the headwinds surrounding glyphosate,
gluphosinate could be the next key growth driver for the company.
New launches and branded products to drive growth
UPL has been continuously investing in brand building and innovation, and this has
paid rich dividends. Its EBITDA margin has improved from 15-16% over FY09-10 to
19-20% over FY16-17. Branded and innovative products command higher margins
than commoditized products. The revenue share of branded products has gradually
increased from 75% in FY14 to 86% in FY17. The company has launched over 240
products and filed 195 patents over FY15-17. Its global product registrations have
increased from 4,692 in FY15 to 5,934 in FY17. The revenue contribution from
innovative products launched in the past three years has grown from 5% in FY15 to
15% in FY17. Revenue from innovative products is likely to improve further, aided by
products launched in the last 2-3 years and by planned product launches across the
globe in the next 2-3 years. Rising contribution of new products is likely to improve
the revenue mix; higher share of value-added products will aid revenue growth.
Valuation and view
We believe UPL is one of the best bets on the global agrochemicals industry, as it
offers (a) a robust product pipeline, (b) an integrated business model (backward
integration of 70-75%), (c) a broad product portfolio covering various crops across
seasons, (d) geographical diversification, and (e) scope to gain further market share
(from the current ~4%). The stock has re-rated from a one-year forward P/E of 7x
(FY14) to a one-year forward P/E of 16x (FY18E). We expect the re-rating to continue
on improving fundamentals coupled with healthy earnings growth. At the current
market price, average free cash flow yield works out to 4.3% over FY18-20 against
the last three years’ average of 4%. We estimate ~12% CAGR in sales and ~14%
CAGR in PAT over FY18-20, with EBITDA margin expanding 80bp to 21.2%. We value
UPL at 17x FY20E EPS of INR55.6, arriving at a TP of INR945. We initiate coverage
with
Buy.
27 February 2018
4

UPL
Offering a complete basket of agro solutions
Not just a crop protection chemicals company
Has transformed from a local to a global generics player
UPL has transformed its business over the years from crop protection chemicals to
comprehensive agro solutions. It has evolved from a crop protection chemicals
company with narrow application relevance into a complete Agro solutions provider
offering seeds, crop protection chemicals, biologicals, soil nutrients and post-harvest
solutions. It has created a product basket targeting multiple crops, fruits and
vegetables, insulating itself from excessive dependence on any one segment. It is
the second largest post patent global player in crop protection market.
Incorporated in 1969, UPL started manufacturing phosphorous-based industrial
chemicals. Over 1980-2000, it diversified into agrochemicals and specialty
chemicals. Over 1980-2017, it transformed itself from a local to global player, with
over 25 acquisitions across the globe. It has focused on identifying and registering
products with robust demand even after going off-patent across geographies.
Currently, UPL markets products in more than 130 countries.
UPL has evolved from an India-based manufacturer of generic products to a global
player. Its manufacturing operations have expanded from three units in India to 33
manufacturing units (14 in India and 19 international) in 12 countries. UPL has been
strategically keeping manufacturing plants close to markets for maximizing its global
logistical efficiency and market responsiveness.
Over the past four decades, it has created a strong presence across the sectoral
value chain – R&D, registration, manufacturing, packaging and marketing. Presence
across the value chain has helped the company to emerge as one of the most
holistic generic agrochemical companies in the world.
Exhibit 1: UPL – presence across the value chain of agro solutions
Source: Company
27 February 2018
5

UPL
Exhibit 2: UPL’s businesses-a synopsis
India
Revenue contribution-
20%
32%
13%
FY17 (%)
Key Crops
Rice-25%, cotton-31%,
Soybean, oil crops, cotton,
Sugar beet,
fruits & vegetables-
coffee, corn, sugarcane,
fruits (Grapes)
16% of sales
fruits & vegetables
& vegetables,
(Soybean and oil crops
and oil crops
contribute 53% of revenue
in Brazil and 26% in rest of
Latin America)
key countries
Brazil (over 60% of sales*),
France, Italy,
Mexico, Argentina,
Spain,
Columbia, Paraguay, Chile,
Netherlands,
Uruguay, Bolivia
Germany, and
UK contribute
more than 60%
of sales*
Agrochemical Market
4.5
14.5
11.6
size (USD b)
UPL Sales (USD m)
452.6
646.4
291.2
UPL Market share (%)
10.1%
4.5%
2.5%
Currency exposure
Net Exporter
Sales in the northern part
Sales in EUR
(Sales & Raw material)
of Brazil (~50%) are made in
and raw
material
Brazilian Real but pegged to
majorly in EUR
USD. Sales in the southern
(natural hedge)
part (~50%) are in Brazilian
Real. Products are imported
from India and China in
USD. Company uses plain
vanilla forward cover.
Sales & Marketing
Sales-480, Marketing-
Sales-181, Marketing-49
Sales-66,
(Employee)
72
Marketing-15
Branded/Generic sales
78%/22%
95%/5%
90%/10%
mix (%)
Market Growth CAGR
9%
5%
-1%
FY12-17 (%)
UPL sales CAGR FY12-17
14%
22%
9%
(%)
Key Brands
Ulala, Phoskill, Lancer
Manzate, Vondozeb,
Devrinol,
Gold, Saaf, Saathi,
Unizeb, Lancer, Quickphos,
Microthiol,
Starthene, Atabron,
Unizeb Gold, Clorin, Zartan,
Penncozeb,
Disect, Wuxal, Avancer
Danado, Imida Gold,
Cuprofix,
Glow and Cuprofix,
LancerGold, Manzate,
Metafol,
Iris,Lagam,Patela
Vondozeb, Unizeb, Lancer,
BeetUp
Quickphos, Unizeb Gold,
Clorin, Zartan, Danado,
Imida Gold, LancerGold,
Glory
Growth Drivers
Ulala, Saaf and Phoskill
Successful launch of eight
Higher acreage
brands joined the
new products (six
of sugar beet
INR1b club
herbicides, fungicides and
to drive Europe
India continues to
insecticides)
sales
grow at healthy pace
Growing need to address
with balanced product
weed resistance
portfolio across crops
Soybean and oil crops
Greater customer
continue to drive growth in
engagement
Latin America
Introduction of
biological and
nutritional products
Strategic focus on
vegetables and fruits
Latin America (Incl. Brazil)
Europe
North America
17%
Fruits &
vegetables, rice,
tree nut and
aquatic (fruits
and vegetables
contribute ~60%
in USA)
USA and Canada
contribute over
80% of sales*
ROW
17%
Rice, cotton, wheat,
sugarcane, fruits &
vegetable and pulses
(fruits & vegetables
contribute ~66% of
sales in Africa &
Middle East)
Indonesia, Thailand,
Japan, Australia,
Pakistan, China and
Africa
9.4
16
395.2
384.6
4.2%
2.4%
Sales and raw
Major sales and raw
material in USD
material in USD
(natural hedge)
(natural hedge)
Sales-31,
Marketing-5
94%/6%
2%
15%
Sales-50, Marketing-
18
75%/25%
0%
19%
Manzate,
Penncozeb, Kinalux,
Microthiol,
Quickphos, Asulox
Cuprofix,
Weevilcide,
Super Tin,
Blazer, Surflan,
Tricor, Banter
Fruits &
vegetables
continue to
drive growth in
North America.
Launched three
products (two
herbicides and a
fungicide).
Launched two
aquatic business
products
Established
distribution
partnership in
Nigeria.
Created a regional
base in Kenya.
Expansion into China
Source: Company, *MOSL estimates, USD/INR-66.1
27 February 2018
6

UPL
Exhibit 3: UPL – successfully transformed itself from a local to a global player
Source: Company
Exhibit 4: The journey of UPL
Source: Company
27 February 2018
7

UPL
Integrated business model in agrochemicals
Over the years, UPL has built a robust business model through backward and
forward integration. This approach has enabled it to secure reliable raw materials
for multi-site manufacturing through an extensive downstream range of products
and services. UPL has pioneered 'backward integration' in agrochemicals and is one
of the few companies in the world to manufacture complex organo-phosphorus
compounds starting from the basic raw material, rock phosphate ore. It has
successfully extended this strategy to other products – it has set up an integrated
plant for caustic chlorine, which is the basic building block for agrochemicals and
specialty chemicals. Backward integration enables 70-75% of its manufacturing to
take place in-house (50-55% in India and 20% overseas). It imports 10-15% from
China and Europe (France and UK). The backward integration enables UPL to
command better gross margin than not just domestic players but also global peers
(refer exhibit-5).
UPL possesses in-house manufacturing expertise, reducing its dependence on third-
party partners thereby providing customized flexibility and moderated costs. UPL’s
formulation plants are located around the world while its synthesis plants are
located in India, as formulation plants require lower capex while synthesis plants are
capex intensive. India has the advantage of 30-40% lower capex than required for
equivalent facilities in western countries.
Exhibit 5: UPL’s higher gross margin indicates its manufacturing efficiency
International
Gross margins (%)
Adama
American Vanguard
Bayer Cropscience
BASF
Bayer
China National Chemical Corp
DuPont
FMC Corp
Ishihara Sangyo Kaisha
Lier chemical
Monsanto
Nufarm
Nippon Soda
Sumitomo Chem
Shenzhen Noposion
Syngenta
Sharda Cropchem
Global Average
Domestic
Gross margins (%)
Excel crop care
Dhanuka Agritech
Insecticides India
PI Industry
Rallis India
Domestic Average
UPL Gross Margin (%)
CY12
31.7
44.0
52.0
24.8
52.1
12.0
37.1
29.8
22.6
52.2
27.4
24.1
27.1
41.0
49.1
33.3
FY13
34.0
34.6
32.8
41.2
43.5
37.2
49.0
CY13
31.4
44.9
51.4
24.9
51.4
10.1
38.3
24.1
22.2
51.5
25.5
24.1
25.7
40.8
45.6
39.6
32.6
FY14
41.2
37.7
30.4
42.0
45.5
39.4
49.5
CY14
31.8
38.3
52.0
24.9
52.0
11.4
40.1
37.1
24.4
22.0
54.1
26.2
25.1
26.9
38.7
45.8
33.1
33.0
FY15
40.9
37.3
32.8
42.4
48.4
40.4
50.2
CY15
31.6
38.6
54.3
27.1
54.3
14.1
39.9
32.8
33.3
24.1
54.5
28.7
24.5
27.3
44.3
47.4
35.8
34.9
FY16
45.4
39.0
31.8
44.7
47.2
41.6
52.7
CY16
33.6
41.1
56.6
31.8
56.6
16.3
41.2
36.5
30.4
23.9
52.0
29.4
25.9
33.1
36.4
49.1
35.9
35.6
FY17
46.3
42.9
33.0
48.9
46.7
43.6
53.1
Source: Company and Bloomberg
27 February 2018
8

UPL
Presence across crops
UPL has a broad portfolio, with products catering to more than 10 major crop
sectors. Its product range, covering crops across seasons, de-risks it from
seasonality.
Exhibit 6: Well diversified across crops, globally
2%
2%
3%
12%
39%
Fruits & Vegetables
Soyabean & Oil Crops
Cotton
Rice
Sugarcane
24%
12%
Wheat
Corn
6%
Others
Source: Company
FY94
52%
24%
FY03
Exhibit 7: Balanced product portfolio across agrochemicals
Herbicides
Others
48%
27%
5%
44%
Insecticides
Seeds (Advanta)
18%
33%
28%
21%
FY09
20%
25%
28%
27%
FY14
10%
9%
29%
23%
29%
FY17
Source: Company
Fungicides
27 February 2018
9

UPL
Tapping the generics opportunity
Products worth ~USD3b to go off-patent over 2017-20
Sizable opportunity for generic pesticides…
Generic pesticides account for ~60% of the global crop protection market, while
proprietary off-patent and patented pesticides account for the remaining share. Of
late, falling agricultural commodity prices, and in turn, falling profitability have been
driving US and Latin American farmers towards less expensive generic products. The
US and Latin American markets account for ~27% and ~17% of the global
agrochemicals market, respectively, and the shift to generic agrochemicals coupled
with multitude of products going off-patent is expected to create an attractive
opportunity (estimated to be worth ~USD3b over CY17-20) for the generics industry.
Products worth USD3.7b have already gone off-patent over CY15-17. While this
would result in a contraction in the US and Latin American markets in value terms, it
would open a plethora of opportunities for Indian agrochemical companies.
Exhibit 8: ~USD3b opportunity size as products go off-patent over 2017-2020
Agrochemicals going off-patent (USDb)
1.3
1.2
0.9
0.4
0.7
0.2
2019
2020
1.6
2014
2015
2016
2017
2018
Source: FICCI & Tata Strategic & Management report
Exhibit 9: Key products going off patent over CY18-22 and their market size
Name
Flubendiamide
Pinoxaden
Aminopyralid
Spirotetramat
Tembotrione
Patentee
Nihon Nohyaku
Syngenta
Dow AgroSciences
Bayer CropScience
Bayer CropScience
Expiry
2019
2019
2019/2021
2017/2022
2021
Type
Insecticide
Herbicide
Herbicide
Insecticide
Herbicide
Globle Sales
(USD mn)
~445
~400
350-400
~150
~200
Source: Agropages, Industry data
27 February 2018
10

UPL
Exhibit 10: Products going off patent over CY18-22
Active Ingredient
Aminopyralid
Amisulbrom
Chlorantraniliprole
Cyprosulfamide
Fenpyrazamine
Flubendiamide
Flucetosulfuron
Fluopicolide
Isotianil
Mandipropamid
Metamifop
Metofluthrin
Metrafenone
Orthosulfamuron
Penflufen
Pinoxaden
Pyrasulfotole
Pyrifluquinazon
Pyrimsulfan
Pyroxasulfone
Pyroxsulam
Saflufenacil
Tembotrione
Thiencarbazone
Topramezone
Valifenalate
Inventor Company
Dow AgroSciences
Nissan Chemical Industries
DuPont
Bayer CropScience
Sumitomo Chemical
Nihon Nohyaku
LG Chem Investment
Bayer CropScience
Bayer CropScience
Syngenta
Dongbu Hannong Chemicals
Sumitomo Chemical
BASF
Isagro
Bayer CropScience
Syngenta
Bayer CropScience
Nihon Nohyaku
Ihara Chemical Industry
Kumiai Chemical Industry
Dow AgroSciences
BASF
Bayer CropScience
Bayer CropScience
BASF
Isagro
Category
Herbicide
Fungicide
Insecticide
Safener
Fungicide
Insecticide
Herbicide
Fungicide
Fungicide
Fungicide
Herbicide
Insecticide
Fungicide
Herbicide
Fungicide
Herbicide
Herbicide
Insecticide
Herbicide
Herbicide
Herbicide
Herbicide
Herbicide
Herbicide
Herbicide
Fungicide
Source: Agropages, Industry data
Exhibit 11: Key off-patent fungicides (2015-2017)
Name
Pyraclostrobin
Fluoxastrobin
Prothioconazole
Metalaxyl-M
Patentee
BASF(E.U)
Bayer
Bayer
Syngenta
Expire Date
2015
2017
2015
2015
Global Sales
Main Crops
(million dollars)
Soybean, corn, cereal, non-
800
agricultural use, fruits and vegetables
165
Cereal, non-agricultural use
625
Cereal
345
Corn, potatoes, vegetables and fruits
Source: Agropages, Industry data
Exhibit 12: Key off-patent herbicides (2014-2016)
Name
Mesosulfuron
Foramsulfuron
Penoxsulam
Patentee
Bayer
Bayer
Dow
Expire Date
2014
2015
2016
Global Sales
(million dollars)
290
130
250
Main Crops
Corn
Corn
Rice
Source: Agropages, Industry data
27 February 2018
11

UPL
Exhibit 13: Market share of post-patent products has been increasing steadily
Patent
30.0%
37.2%
Proprietary off-patent
Post patent
51.5%
51.7%
59.3%
57.8%
60.5%
35.0%
32.9%
24.9%
23.6%
2010
25.3%
23.0%
2011
18.0%
22.7%
2013
20.9%
21.3%
2014
19.6%
19.9%
2015
Source: Company
35.0%
2000
29.9%
2005
Exhibit 14: UPL holds strong position in post-patent crop protection market
Source: Philip McDougall, Company
… and UPL is in a sweet spot to tap this opportunity
Ahead of the curve in product registrations
UPL has been a frontrunner in identifying and registering products with robust
demand even after they go off-patent, and this is reflected in the continuous rise in
its number of registrations across geographies. It has built a strong team of
professionals who possess in-depth knowledge and expertise in the registration
requirements across countries, which helps reduce the time to go-to-market with
new products.
In CY14, UPL launched two brands of gluphosinate for soybean and corn in North
America to fill gaps in its portfolio both from the crop and regional perspective.
Gluphosinate directly competes with glyphosate, to which the targeted herbs have
developed resistance. Given the headwinds surrounding glyphosate, gluphosinate
could turn out to be the next key growth driver for UPL. Timely identification and
registration of potential products coupled with strong R&D capabilities and cost
advantage augurs well for UPL. In FY17, it incurred R&D expenditure of INR3.9b,
2.4% of sales. Its superior network of dealers and distributors enables it to grow
faster than the industry.
27 February 2018
12

UPL
Exhibit 15: Registrations growing at healthy rate
Registrations
Additions during the year
958
390
361
370
420
284
4692
FY15
4976
FY16
5934
FY17
Source: Company
3151
FY11
3541
FY12
3902
FY13
4272
FY14
Exhibit 16: Product portfolio (formulations) continuously improving
No. of Products
1,319
1,241
1,344
1,388
1,415
1,072
1,022
FY11
FY12
FY13
FY14
FY15
FY16
FY17
Source: Company
Strong dealers & distribution network enables superior reach
Despite the dominance of existing MNCs in the key markets of LATAM, Europe and
North America, UPL has been able to make significant inroads in these markets on
the back of its unique product offerings not existing in the distributors’ basket. UPL
has been able to engage with many large distributors with established channels,
trade clout and ability to push inventory through the system, giving UPL deeper
penetration for its brands. Another way of growing distribution network has been
through acquisitions, wherein UPL has been able to leverage the existing
distribution linkages of the acquired companies, giving it a ready market to tap.
Exhibit 17: Distribution reach (India-AF)
Distribution reach (India-AF)
4096
1960
2321
2651
5000
Exhibit 18: Distribution reach (SWAL)
Distribution reach (SWAL)
3599
2893
4224
3039
3299
3513
3465
3690
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY10
FY11
FY12
FY13
FY14
FY15
Source: Company, MOSL, Note: AF-Agrochemical formulation
Source: Company, MOSL, Note: SWAL Corporation Limited (formerly
known as Shaw Wallace Agrochemicals Limited)
27 February 2018
13

UPL
Subdued farm incomes to drive preference for generics
Increasing usage of generic products due to subdued farm income
The global crop protection industry declined at a compounded annual rate of 2.7%
over CY13-16 on declining farm income due to 3-8% compounded annual decline in
the prices of key cereals. Yet, UPL grew at a CAGR of 15% over FY13-17, primarily
driven by volume growth. Post the last acquisition of DVA Agro and Sipcam Isagro
Brazil (SIB) in Brazil in CY12, UPL has been reporting robust volume growth of 10-
17% over FY13-16. Assuming moderate price increases due to higher closing
inventory, the demand for cost effective generic pesticides is likely to grow at a
healthy pace and UPL would be a key beneficiary.
Agricultural commodity prices likely to moderate on higher closing stocks
According to the Agricultural Market Information System (AMIS), the overall trends
in global markets for the four AMIS crops (maize, rice, soybeans and wheat) still
point to ample supplies in CY17/18, supported by above-average to record crops in
most countries and large closing stocks (refer exhibit-19). Price volatility in
international markets remained subdued, although tightening supplies of high
quality wheat and brisker world demand for rice in recent months resulted in firmer
export quotations. Argentine soybean prices received support from continued hot
and dry weather conditions. While the CY18/19 season is still some months away,
early indications point to only modest declines in wheat and maize production.
Exhibit 19: Higher closing stocks across key crops
mn tones
Maize
Rice (milled)
Soybeans
Wheat
2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018E
169
154
165
160
194
232
231
236
248
121
127
142
157
166
169
167
168
170
32
34
28
28
33
44
44
52
47
209
202
199
175
187
205
224
248
270
Source: Agricultural Market Information System
Exhibit 20: Global Agri commodity annual price trend
2010
Soybean oil (USD/mt)
Maiz USD/mt
Rice, Thai 5% (USD/mt)
Wheat, US HRW (USD/mt)
Sugar, world (USD/mt)
Cotton, A Index (USD/kg)
1,005
186
489
224
0.5
2.3
2011
1,299
292
543
316
0.6
3.3
2012
1,226
298
563
313
0.5
2.0
2013
1,057
259
506
312
0.4
2.0
2014
909
193
423
285
0.4
1.8
2015
757
170
386
204
0.3
1.6
2016
809
159
396
167
0.4
1.6
2017
846
155
399
174
0.4
1.8
CAGR
CAGR
CAGR
2005-11 2012-17 2013-16
15.6
-6.0
-4.4
19.8
-10.4
-7.8
11.3
-5.6
-4.0
12.9
-9.3
-9.9
17.5
-4.8
0.3
18.3
-1.1
-3.2
Source: World bank
27 February 2018
14

UPL
Exhibit 21: Soybeans price trend
750
600
450
300
150
Soybeans
370
Exhibit 22: Maize price trend
Maize
404
290
210
130
50
156
Source: World Bank
Source: World Bank
Exhibit 23: Rice (Thai 5%) price trend
1050
800
550
300
50
Rice, Thai 5%
Exhibit 24: Wheat (US HRW) price trend
450
350
Wheat, US HRW
442
250
150
50
192
Source: World Bank
Source: World Bank
Exhibit 25: Cotton (A Index) price trend
Cotton, A Index
6
5
4
3
2
1
2
Source: World Bank
27 February 2018
15

UPL
Robust growth across geographies to continue
UPL to outperform industry in all major markets
UPL is present in over 130 countries, categorized into five geographies – North
America (excluding Mexico), Europe, Latin America (including Mexico), India, and
RoW (Rest of the world). Such geographical diversification enables the company to
mitigate the risk of slowdown in a particular market. UPL has registered robust
growth across geographies, with presence in major crops in each geography.
Exhibit 26: Well diversified across geographies
Europe
FY13
20%
19%
India
ROW
FY17
17%
13%
17%
20%
19%
27%
15%
32%
18%
34%
18%
Latin America
North America
FY20E
12%
19%
Source: Company
In FY17, UPL grew 26% in the Latin American market, while the industry contracted
by 6.6%. In Europe too, the market contracted 1.9% in FY17, but UPL grew 12%.
Similar was the case in North America, where UPL grew 11% in FY17, outperforming
the market growth of 1.1%. UPL’s robust growth across geographies in FY17 was
primarily volume-driven, aided by cost advantage and distribution strength. UPL
grew at a CAGR of ~16% over FY12-17 on organic as well as inorganic growth against
global agrochemicals industry growth of 1% over CY11-16.
Exhibit 27: UPL – market share improves from 3% to 4% over 2014-16
Top 9 players
2014
13%
3%
4%
18%
UPL
Others
Top 9 players
UPL
2016
Others
84%
78%
Source: Company
27 February 2018
16

UPL
Exhibit 28: UPL has consistently beaten industry growth rate
Industry CAGR (CY11-16)
UPL CAGR (FY12-17)
22%
14%
9%
0%
-1%
Europe
ROW
India
LATAM
North America
Overall
Source: Company
9%
5%
2%
1%
15%
17%
19%
Apart from an even presence across the globe, UPL also has a diversified portfolio of
crops, with products catering to more than 10 major crop sectors. In Brazil, the
major crop segments are soybean and oil crops, and they contribute ~53% of UPL’s
overall revenue from the region. In the rest of Latin America, the two crop segments
contribute ~26% to the company’s revenues from the region. Similarly, in the US the
maximum product sales (~60% of company’s revenues from the region) are derived
from the prominent crop sector of fruits and vegetables. India, on the other hand
has a balanced prominence of crops with cotton and rice being two of the most
widely sown. Therefore, UPL has significant presence in cotton and rice in India with
a contribution of 31% and 25% respectively to the company’s revenue from the
region.
Going forward, the company’s focus would be on identifying gaps in terms of crops
or regions and plugging them.
Exhibit 29: UPL has well diversified presence across crops
2%
2%
3%
12%
Fruits & Vegetables
Soyabean & Oil Crops
39%
Cotton
Rice
24%
Sugarcane
Wheat
Corn
6%
12%
Others
Source: Company, MOSL
27 February 2018
17

UPL
Exhibit 30: Global opportunity crop-wise (USD b)
Key Crops Key Regions
Soybean
Rice
LATAM (Brazil)
India, ROW (China), North America (USA), LATAM (Brazil)
Europe (Germany, France, Ukraine), India, ROW (China), North America
Wheat
USD6b
(USA, Canada)
North America (USA, Mexico), India, LATAM (Brazil, Argentina), Europe
Corn
USD5.7b
(Ukraine, France)
Cotton
India, ROW (China), North America (USA, Mexico), LATAM (Brazil)
USD2.5b
Potato
India, Europe (Ukraine), North America (USA)
USD1.2b
LATAM (Brazil), India, ROW (China, Pakistan, Thailand), North America
Sugarcane
USD8.4b
(USA, Mexico)
Europe (Italy, France, Spain, Germany), North America (USA), LATAM
Vine
USD1.7b
(Argentina, Brazil)
Source: Company, MOSL
Global Market
Opportunity
USD8.3b
USD4.8b
Exhibit 31: Global agrochemical opportunity mix (crop-wise; %)
Others
23%
Potato
2%
Vine
3%
Cotton
5%
Rice
10%
Sugarcane
17%
Soybean
17%
Wheat
12%
Source: Company, MOSL
Corn
11%
North America: Fruits and vegetables to remain key crop segments
Revenue from North America, which accounted for 17% of UPL’s overall revenue in
FY17, has grown at a CAGR of 11% over FY13-17. UPL has a strong presence in key
crops of the region like rice, fruits and vegetables. The company also has a strong
foothold in the acquatics (agrochemicals used to counter weeds in fresh water
lakes), horticulture, and post-harvest segments.
UPL has a subsidiary, Riceco in North America, which focuses only on rice herbicides,
providing UPL a cutting edge in the crop. The estimated size of this crop segment is
USD5.9b and UPL serves all key markets – US, Columbia, Thailand, Indonesia, China,
India and Nigeria through its key brands, Eros Gold, Stam and Londax.
Exhibit 32: RiceCo has grown at a CAGR of 14% over FY12-17
RiceCo's sales (USDm)
56
39
55
59
64
76
FY12
FY13
FY14
FY15
FY16
FY17
Source: Company, MOSL
27 February 2018
18

UPL
In CY14, UPL launched two brands of the herbicide, gluphosinate for soybean and
corn to fill gaps in its portfolio both from a crop and regional perspective. One
brand,
Lifeline
is targeted at regions outside the mid-west. The other brand,
Interline
is focused at the mid-west, given the quantum of area under soybean and corn
cultivation in the region. Gluphosinate competes directly with glyphosate. The size
of the market for glyphosate is estimated at USD4.5b-5b. As the targeted herbs have
developed resistance to glyphosate, the prospects for gluphosinate appear bright.
Besides, the WHO is evaluating whether glyphosate is carcinogenic. Given the
headwinds surrounding glyphosate, gluphosinate could drive growth for UPL.
With new product introductions and persistent focus on bridging gaps in crops and
regions, we expect UPL to post revenue CAGR of 10% over FY18-20 in North
America, with the region’s share in overall revenue remaining steady at 17.3%.
Exhibit 33: Expect 10% revenue CAGR in North America over FY18-20
48%
25%
31%
26%
5%
12%
4%
North America Sales (INRm)
30%
13%
16%
6%
11%
8%
9%
11%
Growth %
3,834
FY05
4,778
FY06
6,281
FY07
9,275 11,716 12,340 12,830 14,400 18,711 21,217 22,594 26,120 28,880 31,190 33,998 37,737
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
FY20E
Source: Company, MOSL
LATAM: Soybean and oil crops to continue to drive growth
UPL has a rich presence in Latin America (LATAM), especially in soybeans, oil crops,
corn, cotton, coffee, sugarcane and fruits & vegetables. The key countries in the
region are Brazil, Argentina, Columbia and Mexico. The LATAM region, which
contributed 32% of UPL’s overall revenue in FY17, has grown at a healthy CAGR of
21% over FY13-17.
UPL’s growth strategy in the region has been to tap the resistant weed market and
continue launching new product combinations to maintain effectiveness. This is
reflected in the successful launch of 8 new products in the market (six herbicides,
one fungicide, and one insecticide) in FY17. The company is also considering the
launch of its gluphosinate brands in Latin America – it is awaiting success in North
America and gauging the potential to replace glyphosate in the longer run.
The largest revenue contributor from the geography is Brazil. The company doesn’t
export from Brazil (sales denominated in Brazilian Real); however, the raw materials
are imported (cost denominated in USD), making it susceptible to currency risks.
Volatility in exchange rates had recently resulted in volatility in revenue.
27 February 2018
19

UPL
50% of Brazil sales exposed to currency volatility
We dig further into UPL’s revenue in Brazil and find a 50:50 mix between the North
and the South. Most farmers in the northern part of Brazil export their produce in
USD. Though their sales are in BRL, they are pegged to USD, thus creating a natural
hedge. However, sales in the southern part of Brazil are in BRL, while products are
imported from India and China in USD. Thus, 50% of UPL’s sales in Brazil are exposed
to currency volatility. The company uses plain vanilla forward cover.
Tie-up with Bayer in Brazil to drive sales of Unizeb (Mancozeb)
Recently, UPL has entered into a collaboration with Bayer to jointly promote
fungicides targeted at Asian Rust in Brazil. While UPL will cross-market Bayer’s
FOX,
Bayer will cross-market UPL’s
Unizeb
(Mancozeb). When applied together, these
products work better, giving the farmers better control. The tie-up will benefit UPL,
as it will gain access to Bayer’s robust distribution network – though demand for
Unizeb
(Mancozeb) has been good, limited distribution constrained sales.
Exhibit 34: Expect 15% revenue CAGR over FY18-20 in LATAM
26%
Latin America Sales (INRm)
25%
19%
14%
7%
19,850
FY12
25,067
FY13
28,559
FY14
34,063
FY15
42,730
FY16
53,960
FY17
57,737
FY18E
65,820
FY19E
76,352
FY20E
14%
16%
26%
Growth %
Source: Company, MOSL
Europe: Higher acreage of sugar beet to drive sales
Europe, which contributed 13% of UPL’s overall revenue in FY17, has grown at a
CAGR of 6% over FY13-17. Of late, the region has been affected by extremities of
wet weather in the North, resulting in high disease pressure on potatoes, and dry
weather in the South, with low disease pressure on vine and vegetable crops,
impacting the consumption of fungicides. Despite the market declining 1.9%, UPL
posted a steady growth of 12% in revenue from Europe in FY17.
UPL has diversified presence across countries in the geography, with Germany,
France, Italy, Spain, UK and Netherlands contributing over 60% of revenue. The
company also has strong presence in major corps of the geography – sugar beet,
oilseeds, and fruits (grapes and others) & vegetables. However, there exists a gap to
bridge as far as cereals are concerned.
Europe is one of the toughest markets from the perspective of registration approval.
AIs are first evaluated by the European Food Safety Authority (EFSA) whose findings
are put to vote to the European Commission for the AI to be added to a positive list.
The product then needs to be approved by national authorities of individual
member states and most require 1-2 years to grant approval. The entire process
required a total timeframe of 4-5 years; hence, UPL has already started applying for
27 February 2018
20

UPL
registrations for various fungicides and herbicides focusing on cereals. The company
expects to get approvals for some of the applied registrations by FY20.
Abolition of quota system to lift sugar beet acreage; UPL likely to benefit
From 30 September 2017, the EU (European Union) has abolished the quota system
for sugar. Under new policy, the EU will lift restrictions on production and exports of
sugar as part of the process of making European agriculture more market-
orientated. To support European growers and processors, the sugar sector was
originally subject to production quotas and a minimum price. Sugar beet is a key
crop for UPL; hence, the policy change will drive UPL’s Europe revenue.
Most of the EU's sugar beet is grown in the northern half of Europe, where the
climate is more suited to growing beet. The most competitive producing areas are in
northern France, Germany, the United Kingdom and Poland. The EU also has an
important refining industry that processes imported raw cane sugar.
Going forward, we expect the growth in the geography to remain steady. The
registrations required to bridge the gap in cereal crops where UPL isn’t present will
take time, as it will have to go through the process of approvals. We expect modest
revenue CAGR of 10% from Europe over FY18-20.
Exhibit 35: Expect 10% revenue CAGR over FY18-20 in Europe
83%
85%
Europe Sales (INRm)
Growth %
34%
38%
16%
-1%
-22%
19%
19%
1%
-5%
12%
8%
9%
11%
2,521
FY05
3,388
FY06
6,190 11,459 15,871 15,730 12,250 14,210 16,972 20,156 20,326 19,250 21,480 23,091 25,169 27,938
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
FY20E
Source: Company, MOSL
India: Growth to remain healthy with balanced product portfolio
India is the second largest revenue contributor for UPL after Latin America,
contributing 20% of overall revenue as of FY17. India has also been one of the
fastest growing regions for UPL, growing at a CAGR of 17% over FY13-17.
The Indian agrochemicals market is characterized by high share of insecticides,
contrary to the trends globally, where herbicides form the largest share. India is a
country of tropical climate, which is ideal for fungi and insecticide attack, and owing
to the traditional farm practice, where majority of the farms are self-labored, the
usage of herbicides is low (~16% in India compared to the global average of ~42%).
Farmers usually tend to pull out weeds rather than using herbicides. However, with
changing farm practices in the country, the usage of herbicide is on the rise and this
is expected to be a key segment for growth in India.
For UPL, India is one of the geographies, where it has a presence across all crops and
across all regions. Rice pesticides contribute 25% to its revenue, cotton pesticides
31%, and fruits & vegetables 16%. UPL’s brands
Ullala, Saaf
and
Phoskill
have
27 February 2018
21

UPL
crossed a turnover of INR1b, and going forward, its strategic focus on fruits &
vegetables is expected to deliver sustainable growth. We expect a modest 10%
revenue CAGR over FY18-20.
Exhibit 36: Expect 10% revenue CAGR over FY18-20 in India
India Sales (INRm)
28%
16%
22%
29%
16%
25%
15%
4%
26%
17%
14%
11%
8%
10%
11%
Growth %
4,433
FY05
5,682
FY06
6,579
FY07
8,011 10,326 11,980 14,940 17,190 17,842 22,452 26,219 29,920 33,340 36,007 39,608 43,965
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
FY20E
Source: Company, MOSL
ROW: AME and Asia to drive momentum
The major countries constituting this geography are Australia, Turkey, Japan,
Indonesia and China. Historically, UPL has maintained a strong base across countries
and has experienced strong revenue CAGR of 22% over FY13-17. Recently, it has
been benefitting from revival in rains after several years of drought in Australia and
recovery in the rice crop. The company has grown in different countries owing to its
strong distribution network. Of late, UPL has created a regional base in Kenya, with
a focus to improve its presence in the African continent.
The company has a presence across key crops – rice across Asia; cotton, wheat and
sugarcane in South Asian countries; and pulses in Africa. Strengthening distribution
network to penetrate deeper into existing markets and establishing presence in new
markets are key areas of focus for UPL. We expect UPL to experience strong revenue
CAGR of 14% in this geography over FY18-20.
Exhibit 37: Expect 14% revenue CAGR over FY18-20 in ROW
63%
22%
33%
33%
ROW Sales (INRm)
27%
11%
Growth %
44%
26%
16%
16%
15%
9%
13%
15%
-37%
3,375
FY05
4,106
FY06
5,448
FY07
8,873 11,822 14,878 18,962 11,990 13,266 15,324 17,704 25,420 29,140 31,763 35,892 41,275
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
FY20E
Source: Company, MOSL
27 February 2018
22

UPL
Resistance market holds promising growth
UPL likely to gain market share
Strong R&D and broad product basket to help grab impending opportunity
Despite a variety of solutions available, ~13% of all crops globally are lost due to
pest attacks. One of the major reasons for this is the growing resistance of pests to
available solutions. Usually, pests have a life cycle not spanning more than a few
days or weeks. In just one season of a crop, the pests go through generations, and
over time, develop immunity to the agrochemicals being used on the crop. As a
result, despite persistent use of pesticides, the farmer ends up with damaged crops.
UPL’s strong R&D capabilities and its broad product basket help it to keep changing
molecules or formulations to launch combination products that overcome resistance
across crops. Sensing the opportunity presented by growing pest resistance, UPL has
been continuously altering the combination and mode of action (MoA) of its
products to allow them to tackle pest resistance. UPL’s product basket has several
such products. It has innovated products with new MoA to address sucking pests.
Ullala
has proved to be an excellent defense against the whitefly attack that
threatened cotton farms in Punjab recently.
Unizeb Gold,
which was used for late
and early blight on fruits and vegetables, is now used to treat Asian rust, which
affects soybeans. Another ‘gluphosinate’ based brand
Interline
has tackled the issue
of glyphosate-resistant weeds.
Exhibit 38: UPL’s presence in counter-pest strategy
Lifeline,
Interline,
Fascinate
•Address weed
resistance in
soybean, corn,
cotton and
canola among
others
Tricor
•Acts as pre-
emergent
herbicide for
soybean
Shagun
•Empowers
wheat-
growers to
address
Phalarisminor
and
Lollliumsps
threat
IRIS
•Leading ALS-
inhibiting
herbicide for
soybean
cultivators
Unizeb Gold
•Used to
treat Asian
rust, which
affects
soybean
Source: Company
27 February 2018
23

UPL
Increasing weed resistance to provide room for growth
The menace of weed resistance is spread across the globe, with 479 unique
herbicide resistance cases across 91 crops in 69 countries. Most weeds have
developed resistance against 23 of 26 known herbicide sites of action and 162
herbicides.
UPL has a broad array of products focused at tackling weed resistance:
Lifeline, Interline
and
Fascinate
address the issue in soybeans, corn, cotton,
canola and TNV crops.
TRICOR
addresses most resistant weeds in soybeans, globally.
Shagun,
an emerging brand in India and other wheat-growing markets, controls
resistance to Phalarisminor and Lolliumsps.
IRIS,
a leading brand in India for soybeans, controls weed resistance to ALS
(Acetolactate synthase) MOA.
Exhibit 39: Increasing number of weeds becoming resistant to different modes of action
No. of weeds (2010)
158
90
73
48
26
48
22
37
18
34
18
32
35
No. of weeds (2016)
Mode of action
97
ALS Inhibitors Photo system
II Inhibitors
ACCase
Inhibitors
EPSP
Inhibitors
Synthetic
Auxins
PSI Diverters Others MOA
Source: Company, MOSL
Strategy in place to tap fungicide resistance market
Crops are being impacted by fungi that have become immune to triazoles,
strobilurins and succinate dehydrogenase inhibitors. The key crops getting affected
by this include soybeans, cereals, vines and potatoes.
UPL has addressed the issue by making pre-mixes from its own portfolio as well as
through strategic alliances, and is targeting the resistance market with its Mancozeb
and Copper products. The focus going forward would be to keep changing molecules
or formulations and getting them registered to overcome resistance across crops.
Going forward, growth in the global agrochemicals industry is likely to be driven by
fungicides, which are key to delivering the crop yield and quality improvement the
market is demanding. The share of fungicides in the global agrochemicals market
has increased from ~20% in CY00 to 27% in CY17.
Given the high growth expected in fungicides, UPL too has aligned itself with the
industry – the contribution of fungicides to its revenue has increased from 5% in
FY03 to 29% in FY17. The size of the fungicide market is USD15b.With just ~4.5%
share in the global fungicides market, UPL has immense growth opportunity in the
segment.
27 February 2018
24

UPL
Focus on brand building to aid margin expansion
Expect margin expansion of 80bp over FY18-20 to 21.2%
Steady rise in contribution from branded sales
UPL has managed to amass significant share of branded sales in all geographies it is
present in, the highest being in Latin America (95%) and North America (94%). The
overall share of branded products has increased from 75% of sales in FY14 to 86% in
FY17.
Exhibit 40: Consistent increase in branded sales over the years
Branded sales %
85%
80%
75%
86%
FY14
FY15
FY16
FY17
Source: Company, MOSL
Exhibit 41: Significant share of branded sales across geographies
6%
10%
Branded
5%
Generic
22%
25%
14%
94%
90%
95%
78%
75%
86%
North America
Europe
Latin America
India
ROW
Overall
Source: Company, MOSL
Increased contribution from new launches & branded products has
improved profitability
UPL has been investing continuously in brand building, which has paid rich
dividends. Its EBITDA margin has improved from 15-16% over FY09-10 to 19-20%
over FY16-17. Branded products command higher margins than commoditized
products, and with increasing share of branded products, UPL’s margins have
expanded. UPL has been strengthening its branded business through increasing
marketing and promotion activities globally. It has taken initiatives such as setting
up marketing structures across geographies and continuous new product
introduction under premium brands.
27 February 2018
25

UPL
Exhibit 42: Growing contribution from sale of new products
Sales of new products (as a % of overall sales)
14%
15%
3%
5%
FY14
FY15
FY16
FY17
Source: Company, MOSL
Exhibit 43: Increase in branded sales has led to margin expansion
EBITDA (INRm)
19.5
EBITDA %
19.8
18.7
18.6
20,183
FY14
23,626
FY15
26,180
FY16
32,230
FY17
Source: Company, MOSL
Robust growth in contribution from new products to aid margins
Its strong R&D capabilities and in-depth knowledge of the registration requirements
across countries have helped UPL to consistently roll out new products every year. It
built its product innovation capabilities by combining different molecules to create
more efficient products. It has launched over 240 products and filed 195 patents
over FY15-17. Its registered products have increased from 4,692 in FY15 to 5,934 in
FY17. The contribution of innovative products launched in the last three years to its
revenue has increased from 5% in FY15 to 15% in FY17.
Revenue from innovative products is expected to improve further, driven by
launches in the last 2-3 years and in the next 2-3 years. Rising contribution from new
products is likely to improve the revenue mix towards higher value-added products,
which will lead to value growth for the company resulting in a margin expansion of
80bp over FY18-20 to 21.2%.
27 February 2018
26

UPL
Expect ~14% earnings CAGR over FY18–20
Balanced growth expected across geographies
Expect ~12% revenue CAGR over FY18-20
UPL is set to leverage the impending opportunity in the generics industry, as a
multitude of products (worth ~USD3b) are going off-patent over CY17-20. Despite
the dominance of existing MNCs in the key markets of LATAM, Europe and North
America, UPL has been able to make significant inroads in these markets on the back
of its unique product offerings and strong distribution network.
Assuming moderate price increases due to higher closing inventory, the demand for
cost-effective generic pesticides is likely to grow at a healthy pace and UPL would be
key beneficiary. Geographical diversification and a balanced product portfolio de-
risk the company. Over FY13-17, UPL posted revenue CAGR of 11% in North
America, 6% in Europe, 21% in Latin America, 17% in India, and 22% in ROW. It has
been riding high on its growth curve, with a CAGR (FY13-17E) of 15.4% in revenue
and 26% in PAT. We expect UPL’s revenue to grow at a CAGR of 12.4% over FY18-
20, driven by Latin America and ROW. Latin America is expected grow at a CAGR
15%, ROW at 14%, and North America, Europe and India at 10% over FY18-20.
Exhibit 44: Revenue to post ~12% CAGR over FY18-20
Revenue (INRm)
19.7
Growth %
17.3
12.3
16.2
16.1
11.5
7.8
13.4
91,857
FY13
107,709
FY14
120,905
FY15
140,480
FY16
163,120
FY17
175,833
FY18E
196,076
FY19E
222,267
FY20E
Source: Company, MOSL
27 February 2018
27

UPL
Exhibit 45: Sales growth estimates by geography
INR mn
North America
Growth %
Europe
Growth %
Latin America
Growth %
ROW
Growth %
India
Growth %
Gross Sales
Growth %
FY11
12,830
4.0%
12,250
-22.1%
0
0.0%
18,962
27.4%
14,940
24.7%
58,982
7.4%
FY12
14,400
12.2%
14,210
16.0%
19,850
0.0%
11,990
-36.8%
17,190
15.1%
77,640
31.6%
FY13
18,711
29.9%
16,972
19.4%
25,067
26.3%
13,266
10.6%
17,842
3.8%
91,857
18.3%
FY14
21,217
13.4%
20,156
18.8%
28,559
13.9%
15,324
15.5%
22,452
25.8%
107,709
17.3%
FY15
22,594
6.5%
20,326
0.8%
34,063
19.3%
17,704
15.5%
26,219
16.8%
120,905
12.3%
FY16
26,120
15.6%
19,250
-5.3%
42,730
25.4%
25,420
43.6%
29,920
14.1%
143,440
18.6%
FY17
28,880
10.6%
21,480
11.6%
53,960
26.3%
29,140
14.6%
33,340
11.4%
166,800
16.3%
FY18E
31,190
8.0%
23,091
7.5%
57,737
7.0%
31,763
9.0%
36,007
8.0%
179,788
7.8%
FY19E
33,998
9.0%
25,169
9.0%
65,820
14.0%
35,892
13.0%
39,608
10.0%
200,487
11.5%
FY20E
37,737
11.0%
27,938
11.0%
76,352
16.0%
41,275
15.0%
43,965
11.0%
227,267
13.4%
EBITDA margin to expand on better product mix and operating efficiency
UPL has improved its EBITDA margin gradually by 175bp over FY13-17 to 19.8%, led
by (1) better product mix, and (2) cost rationalization and operating efficiency in
manufacturing, sourcing of raw material and distribution. We expect further EBITDA
margin expansion of 80bp over FY18-20 to 21.2%.
Exhibit 46: EBITDA margin to expand 80bp over FY18-20
EBITDA (INRm)
Margin %
20.4
20.8
21.2
40.9
2.8
7,830
FY13
8,048 14,607
FY14
FY15
10,980
8.9
9.7
17.9
Exhibit 47: PAT to post CAGR of ~14% over FY18-20
PAT (INRm)
81.5
81.5
Growth %
19.5
18.7
18.0
18.6
19.8
16,544 20,183 23,626 26,180 32,230 35,814 40,699 47,044
FY13
FY14
FY15
FY16
FY17
FY18E FY19E FY20E
Source: Company, MOSL
-24.8
FY16
19,930 21,710 23,812 28,086
FY17
FY18E FY19E FY20E
Source: Company, MOSL
Exhibit 48: Net-debt-to-equity to decline further
Net Debt/Equity
0.6
0.5
0.4
0.3
0.4
0.3
0.2
0.1
FY13
FY14
FY15
FY16
FY17
FY18E FY19E FY20E
Source: Company, MOSL
Exhibit 49: RoCE on upward trajectory
RoE
20.1
16.9
13.8
26.3
17.8
16.3
18.7
30.0
20.2
22.4
19.3
18.9
19.3
RoCE
26.3
23.6
23.1
FY13
FY14
FY15
FY16
FY17
FY18E FY19E FY20E
Source: Company, MOSL
27 February 2018
28

UPL
Valuation and view
Initiating with Buy rating
We believe UPL is one of the best bets on the global agrochemicals industry, as it
offers (a) a robust product pipeline, (b) an integrated business model (backward
integration of 70-75%), (c) a broad product portfolio covering various crops across
seasons, (d) geographical diversification, and (e) scope to gain further market share
(from the current ~4%).
Strong free cash flow generation to improve balance sheet
UPL generated free cash flows of INR55.5b over FY13-17. Net-debt-to-equity was
0.4x at the end of FY17. We expect free cash flows of INR46b over FY18-20 and net
debt to decline from INR31.6b in FY17 to INR8.6b in FY20.
Return ratios to remain healthy
Margin expansion and 12.4% sales CAGR over FY18-20 should help UPL’s RoCE to
remain stable at 19.3% in FY20 and to drive RoIC from ~25% in FY18 to ~26% in
FY20. Net worth has grown at a CAGR of ~12% over FY13-17 and is expected to grow
at a CAGR of ~21% over FY18-20.
Re-rating to continue on back of multiple drivers
Over FY14-18, UPL has been re-rated (refer exhibit-51) on geographical expansion as
well as robust growth in those geographies, better product portfolio covering
various crops across seasons, robust product pipeline, moving up the value chain
with focus on adjacent technology (sales of new products surged from 3% in FY14 to
15% of consolidated sales in FY17), and consistent increase in branded sales (from
75% in FY14 to 86% in FY17). Extensive distribution network coupled with farmer
connect has created strong entry barriers in critical geographies. The stock has re-
rated from a one-year forward P/E of 7x (FY14) to a one-year forward P/E of ~16x
(FY18E). We expect the re-rating to continue on improving fundamentals coupled
with healthy earnings growth.
Value UPL at 17x P/E multiple on FY20E EPS
At the current market price, average free cash flow yield of UPL is estimated to be
4.3% over FY18-20E (as compared to an average of 4% over FY15-17). We estimate
~12% sales CAGR and ~14% PAT CAGR over FY18-20, with EBITDA margin expansion
of 80bp to 21.2%. We value UPL at 17x FY20E EPS of INR55.6, arriving at a TP of
INR945. We initiate coverage with
Buy.
27 February 2018
29

UPL
Exhibit 50: Peer comparison
Company Name
Global player
Bayer AG
BASF SE
Monsanto Co
Domestic Player
PI Industries Ltd*
Dhanuka Agritech Ltd*
Bayer CropScience Ltd/India*
UPL Ltd*
Note: * denote FY
Market
Cap.
CY18E
14.2
13.5
21.6
30.8
25.3
42.5
16.8
PE
CY19E
12.9
12.6
19.8
25.9
22.1
34.5
15.3
CY18E
16.0
16.3
34.9
22.3
22.0
16.7
26.3
RoE %
CY19E
16.3
16.1
31.4
22.1
21.7
18.7
23.6
EV/EBITDA
CY18E
8.7
7.3
13.2
22.3
17.8
34.6
10.9
CY19E
8.2
7.1
12.2
18.9
14.9
28.0
9.4
(USD m)
99,907
98,889
54,174
1,882
485
2,314
5,652
Sales PAT
CAGR CAGR
CY17- CY17-
19E
19E
3.3%
3.6%
5%
9%
11%
13%
9.6%
8.4%
2.1%
13%
1%
9%
17%
9.3%
Source: Company, MOSL
Exhibit 51: P/E
28.0
23.0
18.0
13.0
8.0
3.0
P/E (x)
Min (x)
Avg (x)
+1SD
Max (x)
-1SD
Exhibit 52: EV/EBITDA
13.5
EV/EBITDA (x)
Min (x)
Avg (x)
+1SD
Max (x)
-1SD
22.3
17.3
13.2
9.1
6.2
22.3
9.5
11.9
8.8
6.4
15.4
9.1
5.5
3.9
2.6
1.5
Source: Company, MOSL
Source: Company, MOSL
Exhibit 53: P/B
P/B (x)
5.0
Avg (x)
Max (x)
Min (x)
+1SD
-1SD
4.6
3.6
2.6
4.6
3.5
3.4
1.5
1.1
2.0
0.5
Source: Company, MOSL
27 February 2018
30

UPL
SWOT analysis
Global manufacturing
facilities
Better supply chain
Strong R&D
Strong product
portfolio
Better quality control
Strong backward
integration
Deep marketing
reach
Competitive market
Higher working
capital
Cumbersome
product registration
process
USD3b worth of
agrochemicals to go off-
patent by 2020
Labor shortages to drive
herbicide demand
New genetically-
modified crops to drive
herbicide demand
Unfavorable change in
government policies
Lower commodity
prices
Volatility in currency
Climate change and
drought
Fewer pest infestations
27 February 2018
31

UPL
Bull & Bear case
Bull case
In the bull case, we assume strong growth in LATAM, North America, ROW and
India. We assume revenue CAGR of 14.5% (12.4% in base case), EBITDA CAGR of
~18% (~15% in base case) and PAT CAGR of ~19.2% (~14% in base case) over
FY18-20.
We assume strong performance in LATAM (sales CAGR at 16% against 15% in
base case), and ROW (sales CAGR at 15% against 14% in base case) over FY18-
20. We also expect robust sales CAGR of 14% (10% in base case) in India and
North America over FY18-20. Sales CAGR in Europe is likely to be 11% (10% in
base case) over FY18-20.
We assume that the company will see higher margin expansion on higher sales
of innovative products.
Accordingly, we assume 140bp EBITDA margin expansion (80bp in base case) to
21.8% over FY18-20. This will lead to EPS CAGR of 19% over FY18-20.
Assuming a target multiple of 20x in the bull case against 17x in the base case,
we get a bull case target price of INR1,213 (upside of 68%) against the base case
target price of INR945 (upside of 31%), based on FY20E EPS.
Bear case
In the bear case, we assume lower growth in North America, Europe and India.
We assume revenue CAGR of 10% (12.4% in base case), EBITDA CAGR of ~9%
(~15% in base case) and PAT CAGR of ~6% (~14% in base case) over FY18-20.
We assume sales CAGR of 11% in LATAM (15% in base case) and 10% in ROW
(14% in base case) over FY18-20. We also assume sales CAGR of 9% in India and
8% each in North America and Europe over FY18-20 (against 10% in base case).
We assume that the company will see higher margin contraction on higher raw
material cost.
Accordingly, we assume ~30bp EBITDA margin contraction (80bp expansion in
base case) to 20% over FY18-20. This will lead to EPS CAGR of ~6% over FY18-20.
Assuming a target multiple of 15x, we get a bear case target price of INR728
(upside of 1%) instead of the base case target price of INR945 (upside of 31%),
based on FY20E EPS.
Exhibit 55: Scenario Analysis – Bear Case
FY19E
1,99,680
13.6
42,059
21.1
17.4
24,900
12.5
14.7
49.3
FY20E
2,30,532
15.5
50,208
21.8
19.4
30,617
13.3
23.0
60.6
20
1,213
68%
Sales (INR m)
Sales growth (%)
EBITDA (INR m)
EBITDA Margin (%)
EBITDA growth (%)
PAT (INR m)
PAT Margin (%)
PAT growth (%)
EPS (INR)
Target multiple (x)
Target price (INR)
Upside/downside (%)
FY18E
1,75,833
7.8
35,814
20.4
11.1
21,710
12.3
8.9
43.0
FY19E
1,92,567
9.5
38,592
20.0
7.8
22,127
11.5
1.9
43.8
FY20E
2,12,516
10.4
42,590
20.0
10.4
24,522
11.5
10.8
48.6
15
728
1%
Exhibit 54: Scenario Analysis – Bull Case
Sales (INR m)
Sales growth (%)
EBITDA (INR m)
EBITDA Margin (%)
EBITDA growth (%)
PAT (INR m)
PAT Margin (%)
PAT growth (%)
EPS (INR)
Target multiple (x)
Target price (INR)
Upside/downside (%)
FY18E
1,75,833
7.8
35,814
20.4
11.1
21,710
12.3
8.9
43.0
Source: Company, MOSL
Source: Company, MOSL
27 February 2018
32

UPL
Industry overview
Historical growth pattern in global agrochemicals industry
Steady growth from 1980 to 1998
The global agrochemicals industry witnessed steady growth over 1980-1998, with a
couple of hiccups in 1983 and 1991-93, which saw the implementation of the
Payment in Kind scheme in the USA (1983) and the introduction of set-aside in the
EU following CAP reform (1991-93).
Introduction of GM crops led to a decline from 1998 to 2006
The market experienced a decline phase from 1998 to 2006 on account of
introduction of GM crops. The period saw an increase in uptake of GM technology,
particularly in key markets of North America and Latin America, where a rapid
switch to crop varieties containing traits conferring glyphosate tolerance and insect
resistance led to a decline in selective herbicide and insecticide applications in
cotton, canola, soybean and maize. The situation was worsened by flattish crop
prices, which further subdued the demand for agrochemical products.
Turnaround in industry in 2007
The turnaround came in 2007, when crop prices began to grow and spiked in 2008,
leading to a major demand revival in the agricultural economy. However, in 2009,
following the financial crisis, crop prices fell yet again, as the global economy
experienced severe downturn. Additionally, the fall in glyphosate prices on account
of increased supply from Chinese companies led to an overall decline in value of the
global agrochemicals industry. Thereafter, although glyphosate prices remained
steady, the overall industry was kept afloat by improving crop prices, which further
led to a significant rise in agrochemical demand (10% growth in 2013).
Witnessed a slump again in 2015
The industry again witnessed a slump in 2015, when crop protection chemical sales
declined in almost all regions, with the sharpest fall occurring in Europe and Latin
America. Weakening herbicide prices and varying weather patterns (including El
Nino phenomenon and weak monsoons) caused the decline. The decline continued
in 2016, when the crop protection chemicals industry witnessed a decline of 2.5%,
primarily owing to adverse weather conditions in many markets and poor farm
profitability due to low crop prices. In addition, performance was affected by high
distributor inventory in many markets, glyphosate overcapacity and low crop prices.
27 February 2018
33

UPL
Exhibit 56: Global crop protection market expected to grow at a CAGR of 4% over 2016-2020
60
55
50
45
40
35
30
49.9
58.7
Source: Philip McDougall
Exhibit 57: Segment-wise global crop protection outlook
24.6
2015
2020E
21.6
14.3
16.1
13.7
16.2
1.5
Herbicides
Insecticides
Fungicides
1.7
Others
Source: Philip McDougall
Exhibit 58: Region-wise global crop protection market mix
Latin America
Asia
Europe
Middle East/Africa
NAFTA
Exhibit 59: Segment-wise global crop protection mix
Herbicides
Insecticides
3.0
Fungicides
Others
18.5
3.9
25.9
26.8
42.3
25.1
26.6
28.0
Source: Philip McDougall
Source: Philip McDougall
27 February 2018
34

UPL
Key risks
Currency fluctuation impacts earnings
The company has businesses across globe. Its agrochemicals are marketed in 130
countries. Its import bill is also significant. It is exposed to almost all the currencies
of the world. Volatility in exchange rates can result in huge losses for the company.
To mitigate this risk, UPL takes adequate insurance cover for open exposures. Its
huge exports act as natural hedge against imports. It carries out its business in major
currencies such as USD, EUR, JPY and GBP. These currencies are comparatively more
stable. Hence, UPL is usually adequately protected.
Droughts and reduced pest attacks can lower demand for agrochemicals
The demand for UPL’s products depends majorly on weather patterns and pest
attacks. Demand for agrochemicals is adversely impacted by drought and fewer pest
attacks, resulting in inventory buildup. To mitigate this risk, UPL has strengthened its
supply chain and product portfolio, and has diversified across geographies. Its
product portfolio has expanded year after year, ensuring regular supply of products
for diverse applications.
Resistance development reduces life of product
The effective life of agrochemicals gets reduced over time, as the targeted pests
develop resistance to them. Constant innovation and regular introduction of newer
agrochemicals is essential for effectively eliminating pest attacks. To mitigate this
risk, UPL has set up a big R&D team, consisting of chemists, chemical engineers and
other experts to work constantly on developing new products and processes. The
company protects some of its products by getting them patented.
27 February 2018
35

UPL
Management overview
Mr Rajnikant Shroff, Executive Chairman & Managing Director
Mr Rajnikant Shroff is the Executive Chairman & Managing Director of the company.
He is a graduate in Chemistry from the Bombay University. He established a novel
process of manufacturing mercury salts in a plant at UK and was paid royalty for it
by the British company. He mastered red phosphorous and quickly moved on to the
production of other chemicals like aluminum phosphide (fumigant) and zinc
phosphide (rodenticide) for agriculture.
Mr Jaidev Shroff, Group CEO, Promoter-Director
Mr Jaidev Shroff is the Global CEO of UPL and Vice-Chairman of Advanta. He has
over 28 years of experience in the Agri-Inputs industry in India and internationally.
Mr Shroff holds a Bachelor's Degree in Chemistry from Bombay University. He
primarily looks after development of new products, global business and strategic
alliances with various parties in different markets.
Mr Vikram Shroff, Executive Director, Promoter-Director
Mr Vikram Shroff is Executive Director of the company. He is a Chemistry graduate
from the University of Mumbai, with a professional post-graduate degree from the
Harvard Business School of Management. He is instrumental in making strategic
decisions for the company, leads many of the functions, and has been responsible
for the execution of several projects of the group.
Mr Arun Ashar, Director - Finance
Mr Arun Ashar is Director - Finance of the company. He is Chartered Accountant,
with a rich experience of 42 years. He is a member of The Institute of Chartered
Accountants of India. He completed his graduation from the University of Mumbai.
Mr Vinod Sethi served as Managing Director of Morgan Stanley Investment
Management Inc until February 2001 and served as its Chief Investment Officer and
Portfolio Manager for 12 years. He has been a Non-Executive & Independent
Director of UPL since January 30, 2006. He has served as an Additional Director of
Uniphos Enterprises since January 30, 2006. He is a graduate in Chemical
Engineering and also holds a BTech from Indian Institute of Technology (IIT),
Mumbai and an MBA in Finance from Stern School of Business, New York University.
Mr Vinod Sethi, Independent Director
Mr Pradeep Goyal, Independent Director
Mr Pradeep Goyal is an engineer. He completed his BTech (Metallurgy) from Indian
Institute of Technology, Kanpur (1978) and obtained his SM (Materials Science and
Engineering) from the world-renowned Massachusetts Institute of Technology,
Cambridge, MA, USA, (1980).
27 February 2018
36

UPL
Financials and valuations
Consolidated - Income Statement
Y/E March
Total Income from Operations
Change (%)
Raw Materials
Employees Cost
Other Expenses
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income
Exchange difference 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 (%)
FY14
107,709
17.3
54,408
9,482
23,636
87,526
81.3
20,183
18.7
4,069
16,113
4,853
1,239
-75
12,574
-853
11,721
2,217
18.9
156
-221
72
9,498
8,048
2.8
7.5
FY15
120,905
12.3
60,164
10,428
26,687
97,279
80.5
23,626
19.5
4,245
19,381
5,170
911
939
14,182
-30
14,153
2,440
17.2
49
-209
433
11,440
14,607
81.5
12.1
FY16
140,480
16.2
67,800
14,340
32,160
114,300
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
0
850
120
9,400
10,980
-24.8
7.8
FY17
163,120
16.1
78,160
16,270
36,460
130,890
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
0
190
60
17,270
19,930
81.5
12.2
FY18E
175,833
7.8
83,925
17,260
38,834
140,019
79.6
35,814
20.4
7,045
28,769
6,273
4,300
0
26,796
0
26,796
4,823
18.0
0
200
63
21,710
21,710
8.9
12.3
FY19E
196,076
11.5
93,226
19,046
43,105
155,377
79.2
40,699
20.8
8,100
32,599
6,490
4,000
0
30,110
0
30,110
6,022
20.0
0
209
66
23,812
23,812
9.7
12.1
(INR Million)
FY20E
222,267
13.4
105,906
21,363
47,953
175,223
78.8
47,044
21.2
8,946
38,098
6,130
3,500
0
35,469
0
35,469
7,094
20.0
0
220
69
28,086
28,086
17.9
12.6
Consolidated - Balance Sheet
Y/E March
Net Worth
Minority Interest
Total Loans
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
E: MOSL Estimates
FY14
52,474
1,721
28,610
813
83,617
64,646
38,560
26,086
12,124
2,278
7,373
79,731
24,801
32,085
10,228
12,618
43,973
26,919
13,373
3,681
35,757
83,617
FY15
58,603
444
27,815
446
87,307
65,352
39,537
25,815
14,493
5,831
7,636
89,064
29,376
37,930
10,098
11,659
55,532
32,177
19,207
4,148
33,532
87,307
FY16
58,890
440
47,710
-3,900
103,140
93,150
58,700
34,450
4,170
4,840
3,350
117,980
37,870
51,000
11,890
17,220
61,650
39,620
20,990
1,040
56,330
103,140
FY17
73,970
330
60,580
-5,010
129,870
96,060
59,540
36,520
4,190
7,920
3,780
144,700
41,560
56,560
28,950
17,630
67,240
48,850
17,300
1,090
77,460
129,870
FY18E
91,243
330
55,580
-5,010
142,143
108,146
66,585
41,561
4,190
7,334
3,780
157,526
45,986
62,625
27,814
21,100
72,248
52,425
18,648
1,175
85,278
142,143
FY19E
110,181
330
52,580
-5,010
158,081
120,013
74,685
45,328
4,190
7,467
3,780
177,656
51,083
69,835
33,208
23,529
80,340
58,235
20,795
1,310
97,316
158,081
(INR Million)
FY20E
132,518
330
49,580
-5,010
177,418
131,987
83,631
48,356
4,190
7,493
3,780
204,812
58,031
79,164
40,945
26,672
91,213
66,155
23,573
1,485
113,599
177,418
27 February 2018
37

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 (%)
Return Ratios (%)
RoE
RoCE
RoIC
Working Capital Ratios
Fixed Asset Turnover (x)
Inventory (Days)
Debtor (Days)
Creditor (Days)
Leverage Ratio (x)
Net Debt/Equity
FY14
15.9
24.0
103.9
3.4
21.1
FY15
28.9
37.3
116.0
4.2
22.6
24.9
19.3
6.2
3.2
16.2
0.6
26.3
20.1
25.2
1.9
89
115
97
0.3
FY16
21.7
35.1
116.6
5.0
26.9
33.1
20.5
6.2
2.8
15.3
0.7
18.7
20.2
22.8
1.5
98
133
103
0.6
FY17
39.5
52.8
146.5
7.0
20.5
18.3
13.7
4.9
2.4
12.3
1.0
30.0
22.4
26.9
1.7
93
127
109
0.4
FY18E
43.0
56.9
180.7
8.8
20.5
16.8
12.7
4.0
2.2
10.9
1.2
26.3
19.3
24.7
1.6
95
130
109
0.3
FY19E
47.2
63.2
218.2
9.7
20.5
15.3
11.4
3.3
2.0
9.4
1.3
23.6
18.9
24.2
1.6
95
130
108
0.2
FY20E
55.6
73.3
262.4
11.4
20.5
13.0
9.8
2.7
1.7
7.9
1.6
23.1
19.3
25.7
1.7
95
130
109
0.1
0.5
16.3
16.9
21.4
1.7
84
109
91
0.4
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
Inc/(Dec) in Debt
Interest Paid
Dividend Paid
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
FY14
12,574
4,069
4,323
-1,913
-3,970
15,083
-675
14,408
-5,664
8,744
1,791
1,010
-2,863
-11,444
-4,254
-1,102
-16,800
-5,255
15,482
10,228
FY15
14,182
4,245
4,576
-2,826
-5,529
14,648
-558
14,090
-5,311
8,780
-1,982
2,986
-4,307
-689
-7,395
-1,830
-9,913
-130
10,228
10,098
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
FY18E
26,796
7,045
1,973
-4,823
-8,954
22,036
0
22,036
-11,500
10,536
0
4,300
-7,200
-5,000
-6,273
-4,444
-15,972
-1,136
28,950
27,814
FY19E
30,110
8,100
2,490
-6,022
-6,643
28,034
0
28,034
-12,000
16,034
0
4,000
-8,000
-3,000
-6,490
-4,874
-14,639
5,394
27,814
33,208
(INR Million)
FY20E
35,469
8,946
2,630
-7,094
-8,546
31,405
0
31,405
-12,000
19,405
0
3,500
-8,500
-3,000
-6,130
-5,749
-15,168
7,737
33,208
40,945
27 February 2018
38

REPORT GALLERY
RECENT INITIATING COVERAGE REPORTS
Rs

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
UPL
*In case the recommendation given by the Research Analyst becomes inconsistent with the investment rating legend, the Research Analyst shall within 28 days of the inconsistency, 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).
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Research Analyst may have served as director/officer, etc. in the subject company in the last 12 month period. MOSL and/or its associates may have
received any compensation from the subject company in the past 12 months.
In the last 12 months period ending on the last day of the month immediately preceding the date of publication of this research report, MOSL or any of its associates may have:
a)
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MOSL and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. To enhance transparency, MOSL has incorporated a Disclosure of Interest Statement in
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the recipients of this report should be aware that MOSL 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
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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.
Disclosure of Interest Statement
Analyst ownership of the stock
UPL
No
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 MOSL or
its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOSL research activity and therefore it can have an independent view with regards to subject company for which Research Team have
expressed their views.
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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.
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Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022-3980 4263; www.motilaloswal.com. Correspondence Address: Palm Spring Centre, 2nd Floor, Palm
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na@motilaloswal.com,
Contact No.:022-30801085.
Registration details of group entities.: MOSL: SEBI Registration: INZ000158836 (BSE/NSE/MSE); CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Investment Adviser: INA000007100.
Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670) offers PMS and Mutual Funds products. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) offers wealth
management solutions. *Motilal Oswal Securities Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs, Insurance and IPO products. * Motilal Oswal Commodities Broker Pvt. Ltd. offers Commodities Products. * Motilal Oswal Real
Estate Investment Advisors II Pvt. Ltd. offers Real Estate products. * Motilal Oswal Private Equity Investment Advisors Pvt. Ltd. offers Private Equity products
27 February 2018
40