Motilal Oswal recommended neutral rating on UPL with a target price of Rs 527 in its research report dated August 01, 2020.
Motilal Oswal 's research report on UPL
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. Maintain Neutral.
Outlook
Expect revenue/EBITDA/PAT CAGR of 7%/11%/11% over FY20–22E. We value the stock at 12x FY22E EPS and arrive at TP of INR527. Maintain Neutral.
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