Buy UPL; target of Rs 620: Dolat Capital

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

Dolat Capital's research report on UPL

UPL Ltd’s 1QFY21 performance exhibits the company’s acumen and its ability to navigate through tough times. UPL reported a strong operating performance on the back of margin improvement whilst demonstrating prudence in working capital management.  Sales came in-line with our estimates at Rs 78.3bn (D.est: Rs 81.4bn), EBITDA/APAT came ahead of our estimates at Rs 18.3/5.7bn (D.est: Rs 13.5/1.91bn).  Gross margin expansion of 360 bps and controlled other expenses amidst the pandemic led to a decent EBITDA growth of 10.9% YoY to Rs 18.3bn (assuming exchange difference on debtors/creditors in opex). Interest and depreciation were up by 71.2% and 17.0% YoY to Rs 7.0/5.2bn respectively.  UPL had raised USD 500mn through bonds to buy-back their existing USD 500mn notes which are due to mature in Oct-2021, the issue was worth Rs 37.7bn and is now a part of company’s gross debt. The company has already repaid Rs 6.19bn through the same. The company had also raised USD 400 mn via perpetual bonds (which are a part of their equity) at a coupon of 5.35-5.45%.  The closing cash of the company stood at Rs 104.6bn. Consequentially, the company’s gross debt inclusive of perpetual bonds stands at ~Rs 350 bn.

Outlook

We value UPL at 8.5x EV/EBITDA and have a target price of Rs 620/share. Maintain our buy rating on the stock.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Read More