Motilal Oswal is bullish on UPL has recommended buy rating on the stock with a target price of Rs 945 in its research report dated April 27, 2018.
Motilal Oswal's research report on UPL
UPLL's revenue grew 6.5% YoY to INR56.9b (est. of INR58.9b). EBITDA margin expanded 30bp YoY to 21.4% (est. of 21.8%), led by gross margin expansion of 90bp YoY to 49%. EBITDA grew 8.2% YoY to INR12,180m (est. of INR12,854m). Adj. PAT fell 9.5% YoY to INR7,650m (est. of INR7,145m) in 4QFY18 due to a significant increase in the tax rate to 17.7% from 7.1% in 4QFY17. For FY18, revenue grew 6.5% YoY to INR173.8b. EBITDA margin expanded 40bp YoY to 20.2% in FY18, led by gross margin expansion of 120bp. Adj. PAT, thus, rose 8% YoY to INR21b.
Outlook
We believe the past product launches are likely to bear fruit now. The company is expected to continue focusing on diversification in terms of geographies, product mix and crop mix which will provide enough scope to gain further market share (from current ~4%). We, thus, largely maintain our estimates and expect revenue/PAT CAGR of 13%/15% over FY18-20E. We value UPLL at 17x FY20E EPS and arrive at a TP of INR945 (25% upside). Maintain Buy.
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