1 August 2020
1QFY21 Results Update | Sector: Agri
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TP: INR527 (+10%)
Subdued sales; debt remains a concern
Revenue and PAT below est.; in-line EBITDA
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Financials & Valuations (INR b)
EPS Gr. (%)
Div Yield (%)
FCF Yield (%)
365.4 / 4.7
618 / 240
In 1QFY21, gross margin expansion and synergy benefits aided EBITDA
growth, whereas revenue stood flat YoY, on account of: (i) supply chain
disruption in Latin America, North America, and Europe, (ii) the
postponement of sales in Brazil from 1Q to 2Q due to fluctuation in the
Brazilian real, and (iii) pre-buying in North America at the end of 4QFY20
impacting growth in the region in 1QFY21.
We lower our earnings estimate by 8%/6% for FY21/FY22, factoring lower-
than-expected earnings and moderation in growth in Latin America and
North America. In our view, high debt remains a key concern on the stock.
Muted show in LATAM / North America, but India outshines
Shareholding pattern (%)
Jun-20 Mar-20 Jun-19
UPLL reported revenue decline of 1% YoY to INR78.3b (est.: INR86.4b) in
1QFY21 (price: -1%; volume and exchange impact stood flat YoY). Gross
margins improved 20bp YoY to 43% on improvement in the product mix and
geography mix. EBITDA margins expanded 170bp YoY to 22.7%, and EBITDA
grew at 7% YoY to INR17.8b (est.: INR18.5b). Adj PAT was up 10% YoY to
INR6.5b (est.: INR6.9b), aided by EBITDA growth and higher other income,
offset by higher depreciation and interest cost.
Note that we have excluded
the contribution made toward the PM CARES Fund for COVID-19 (of
INR750m) from EBITDA and reported it under exceptional items.
In 1QFY21, UPLL reported strong revenue growth of 27% YoY in India v/s
15% industry growth. Europe edged up 1% YoY due to supply chain delays,
which resulted in a shift in revenues to 2Q. Robust business growth in
Southeast Asia owing to rains and synergies led to 10% YoY growth in RoW.
Revenue from the LATAM region declined 16% YoY on forex volatility in Brazil,
which led to the postponement of orders to later quarters. Revenue from
North America declined 14% YoY on pre-buying due to COVID-19 in 4QFY20.
According to management, for 1QFY21, cost synergy realized from the
Arysta acquisition stood at INR830m (USD11m) and revenue synergies at
Highlights from management commentary
Note: FII includes depository receipts
Gross debt was INR325b as of Jun’20 v/s. INR288b in Mar’20. Net debt
was INR220b as of June’20 (similar to March levels).
UPLL aims to reduce net debt to EBITDA to 2x by FY21 from 2.9x as of FY20.
It also targets reducing net debt by USD500m in FY21.
The company has guided for revenue growth of 6–8%, with EBITDA growth
of 10–12% in FY21 (in normal case scenario).
Research Analyst: Sumant Kumar
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.