UPL hits new high, rises 2% to Rs 921 after block deals

Shares of UPL hit a new high of Rs 921, up 2 per cent, in intra-day trade on Friday, after more than two million shares of the agrochemicals company changed hands on the BSE through block deal.

At 09:19 am, around 2.41 million equity shares, representing 0.52 per cent of total equity of UPL, changed hands on the BSE, exchange data showed.

Since February 2019, the stock has surged 17 per cent after the company completed Arysta's integration. In comparison, the benchmark S&P BSE Sensex was up 5 per cent during the same period.

Management says over the next three years, it expects revenue synergy of $350 million and cost synergy of $250 million. While synergy will materialize over the next three years, the highly leveraged balance sheet in the near term will result in deterioration of return ratios, according to analysts at Elara Capital.

The company’s growth prospects have been enhanced post Arysta amalgamation, as it does not just strengthen UPL’s position in Europe (around 21 per cent of the global agrochemical market), but also plugs loopholes, which UPL has in its portfolio globally (for example – wheat in Europe and North America), according to brokerage firm Motilal Oswal Securities.

UPL has established itself as a strong player in the North American market, especially with the introduction of glufosinate-based products, which have been posting higher growth; the brokerage firm said in company update with maintains ‘buy’ rating with target price of Rs 1,035 on UPL’s holistic growth prospects.

At 01:10 pm, UPL was trading 1.4 per cent higher at Rs 916 on the BSE, against 1 per cent rise in the S&P BSE Sensex. A combined 3.52 million equity shares changed hands on the counter on the BSE and NSE so far.