UPL gains 2%, nears 52-week high as board considers bonus issue

The board of directors is scheduled to meet on May 17, 2019 to consider issue of bonus shares and dividend on equity shares of the company.

Shares of UPL gained 2 per cent intra-day on Wednesday to quote Rs 968 apiece on the BSE in an otherwise weak market after the company announced its plan to issue bonus issue shares.

At 12:51 pm, the stock of the agrochemicals major was trading close to its 52-week high of Rs 975 - quoted on May 3, 2019 - on the S&P BSE, which was down 1 per cent at 37,921 levels.

“The board of directors of the company is scheduled to meet on May 17, 2019 to consider issue of bonus shares and dividend on equity shares of the company,” UPL said in a BSE filing.

The board said it will also consider the audited standalone and consolidated financial results of the company for the year ended March 31, 2019.

Earlier, in 2008, UPL had issued bonus shares in the ratio of 1:1 i.e. one bonus share for every one share held in the company as on record date.

Thus far in the calendar year 2019, UPL has outperformed the market by surging 28 per cent, as compared to 5 per cent rise in the S&P BSE Sensex.

Analysts at Edelweiss Securities expect UPL’s March quarter revenue to grow 12 per cent year on year (y-o-y), driven by Latin America while growth in India would remain muted due to a weak rabi season.

“We have built in double-digit revenue growth of 12 per cent y-o-y for UPL. We believe improved global agricultural scenario is likely to remain beneficial for the company. In LATAM, we expect a 20 per cent y-o-y growth given the strong trend (9MFY19: 24%). However, for the domestic market, a weak rabi season coupled with higher channel inventory is expected to dent growth momentum. We expect EBITDA margin to contract marginally by 20bps YoY to 21.2 per cent,” the brokerage firm said in a result preview.

“Q4FY19 numbers of UPL will not be comparable y-o-y as the company will consolidate around 2 month financials of Arysta for the first time. For the group, we expect 7.5 per cent y-o-y revenue growth to Rs 6,100 crore. India, LATAM and North America are likely to show tepid mid-single digit growth while Europe and RoW are expected to grow in double digits. Arysta is expected to clock revenue of Rs 2,890 crore (US $ 410 million),” analysts at Prabhudas Lilladher said in earnings preview.

The brokerage expects around 60 bps reduction in gross margin for UPL group even as it expects the margin to largely remain unchanged at 50.9 per cent on a consolidated basis.

"We expect EBITDA margins to contract by around 30 bps to 21.1 per cent on the back of higher other expenses," it added.