UPL – Q2 FY20 (Unaudited – Cons.)
Share price – 560
Total revenue from operations at 7,817 Cr
4,257 Cr (83.62%) YoY | 7,906 Cr (-1.12%) QoQ
Half year revenue: 15,723 Cr Vs. 8,391 Cr (87.32%)
Net Profit of 103 Cr
276 Cr (-62.63%) YoY 178 (-42.17%) QoQ
Half year ending Net Profit: 319 Cr Vs. 788 Cr (-59.51%)
EPS (in Rs.) 1.17
3.53 YoY | 2.33 QoQ
Half Year ending EPS: 3.50 Vs. 10.21
View: Result is down and weak. Although YoY revenue increased but profit significantly down due to higher cost of consumption cost and finance cost shoot by more than 110% in YoY however slightly declined in QoQ. Exceptional cost of INR 305 Cr booked in this quarter (see the detailed below).
Business Highlights & Updates:
Q2FY20 EBITDA is around INR 1,471 Cr Vs. 819 Cr in Q2FY19. H1FY20 EBITDA is around INR 2,750 Cr Vs. 1,739 Cr in H1FY19.
A competitor had filed a litigation against a US subsidiary of the Group and the Company for infringement of patent, loss of profits and unjust enrichment. On 11 October 2019 a jury in the United States federal district court in Delaware rendered a verdict against the company and its U.S.-based subsidiary, Decca U.S. Post-Harvest, Inc. ('Decco'), in favour of Agro Fresh Inc. for an aggregate amount of approximately US$ 31 million (approximately Rs 217 crores). While the Group will seek to remedy the adverse decision of the jury, this amount has been provided for in the quarter as an exceptional item in the statement of profit and loss.
Exceptional Items for the periods reported majorly includes cost related to Agrofresh litigation (Refer above note) fn the U.S.A. and severance and integration cost due to acquisition of Arvsta group and LATAM restructuring expenses.
ROE and ROCE is around 3.5% and 11% respectively and book value per share is around INR 160 and share is currently trading at 3.6x of its book value. Company is currently trading at annualized PE of around 81 which is very expensive as per Industry benchmark. Promoter holding in the company is around 27.9% which is too low, mutual fund and FIIs hold around 4.3% and 43.8% in the company. Company has around significant debt of INR 30K Cr and its increasing trend. The very bad thing is company has around significant period of debtor outstanding which is more than 180 days (Big concern in long run). Liquidity problem can arise.
Share price high 709 and now 560. UPL Limited, formerly United Phosphorus Limited, is an Indian multinational company that manufactures and markets agrochemicals, industrial chemicals, chemical intermediates, and specialty chemicals, and also offers crop protection solutions. UPL is very strong name in the field of agriculture sector and continuously outperform till last year. Last two quarter company position is down. Long term investor can keep cautious approach to continue with atleast two quarter based on their risk appetite. Short term outlook is highly volatile and downside. Support price is INR 525.
Risk: High debt with liquidity problem due to realization of debtor is too slow and considerably very long period.