UPL jumps 5%, hits new high on healthy March quarter results

The strong margins and cost synergies have augured well for EBITDA margin expansion of 270 basis points (bps) at 22 per cent during the quarter

Shares of UPL hit a new high of Rs 728.80, up 5 per cent, on the BSE in intra-day trade on Friday after the company reported a healthy 72 per cent year-on-year (YoY) jump in its consolidated net profit at Rs 1,065 crore on the back of strong operational performance. The global provider of sustainable agriculture products and solutions had posted a profit of Rs 617 crore in the year-ago quarter.

The stock is trading higher for the fourth straight day and has gained 16 per cent during this period, while in the past three weeks, it has rallied 24 per cent on the BSE. At 09:27 am, it was trading 4 per cent higher at Rs 720, against a marginal 0.01 per cent rise in the S&P BSE Sensex at 48,696 points.

In Q4FY21, the company’s revenue from operations increased 15 per cent YoY to Rs 12,797 crore. It logged volume growth of 18 per cent and a price increase of 1 per cent. Earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 31 per cent YoY to Rs 2,839 crore. The strong margins and cost synergies have augured well for EBITDA margins expansion of 270 basis points (bps) to 22 per cent during the quarter.

The management said the strong volume growth in Latin America, up 40 per cent YoY, was helped by the catch-up of a delayed season in Brazil. However, the depreciation in the Brazilian Real more than offset the volume and price increases.

"The management commentary during the call sounded bullish on the global agrochemicals market, led by better farm economics on account of rising global agri-commodity prices – which would drive agrochemical consumption. This, coupled with lower channel inventory, is also expected to bode well for strong demand in the Agrochemicals sector in FY22. The company further expects to take price hikes in FY22 owing to an increase in raw material prices. It remains confident that this would be absorbed by the farmers owing to their higher agri-commodity prices," Motilal Oswal Securities said in the results update.

Meanwhile, the board has recommended a dividend of 500 per cent i.e. Rs 10 per equity share on equity shares of Rs 2 each, subject to the approval of members at the ensuing Annual General Meeting (AGM), the company said.