UPL restructuring: Analysts decode impact on valuations, Advanta IPO

The UPL group will operate through two separately listed verticals-Global Crop Protection and Seeds-each with distinct structural drivers.

UPL’s board approved the company's restructuring plans on Friday (February 20, 2026), after market hours. UPL is undertaking a three-step restructuring to create UPL Global (UPL 2) as a unified India and international crop protection platform, positioning it as the world’s second-largest listed pure-play crop protection company.

 

The plan involves merging UPL SAS into UPL Ltd, demerging the India Crop Protection business into UPL 2, and merging UPL Cayman into UPL 2, alongside Advanta’s initial public offering (IPO), consolidating its seeds and Decco businesses. UPL Ltd will remain the parent and capital allocator, with plans to enhance transparency and potentially eliminate the prevailing conglomerate discount to UPL. The group will operate through two separately listed verticals—Global Crop Protection and Seeds—each with distinct structural drivers.  While few brokerages believe UPL’s restructuring should simplify the group into two benchmarkable pure plays, improve transparency, enable subsidiary-level fund-raising and support deleveraging, with Advanta’s initial public offer (IPO) seen as a key trigger, others flag that the exercise offers limited near-term balance sheet relief as debt stays largely unchanged.

  At 10:19 AM, UPL shares slipped 13.4 per cent in trade, logging an intra-day low of ₹650.4 per share on BSE. In comparison, BSE Sensex was up 0.6 per cent at 83,315.35.

What will UPL’s restructuring mean for the investors?

Motilal Oswal Financial Services, in its note, said that UPL 2 will become a focused global crop protection platform, while UPL 1 will sharpen its manufacturing-led business-to-business (B2B) positioning. The move also supports subsidiary-level capital raises, accelerates deleveraging, and strengthens the pathway to valuation re-rating, the brokerage noted. 

 

Further, crop protection remains volume-led and resilient, benefiting from diversified demand, biofuel-driven acreage expansion, and expanding post-patent opportunities, with a balanced mix of post-patent and differentiated products supporting margins.  Advanta, the high- return on capital employed (RoCE) (25 per cent) seeds platform, offers superior margins, strong cash flows, and IP-led growth, enabling both businesses to be valued independently in line with their return and capital intensity profiles.

 

The brokerage has reiterated its ‘Neutral’ rating on the stock with a target of ₹730.

 

Similarly, Antique Stock Broking said that the transaction is a win-win for all i.e., UPL, minority, and private equity holders. Re-structuring will help to simplify the structure, enhance strategic focus, and unlock shareholder value by enabling clearer investment choices. Further, the move will provide an opportunity to give exit to existing private equity (PE) investors (resultant holding of 16.9 per cent with no lock-in period). 

 

UPL's focus remains on de-gearing, with a net debt-to-Earnings before interest, tax, depreciation, and amortisation (Ebitda) ratio of 1.2x-1.5x in the medium term, compared to 4.6x/2.1x/1.6-1.8x in FY24/25/26. 

 

Antique anticipates that holding company discount (higher vs currently 25-30 per cent) in valuation may limit value unlocking going forward. Recently, Advanta has filed a DRHP to get listed, which will be a key near-term trigger for the stock. 

 

The brokerage expects profitable growth, sustained cash flow, and balance sheet deleveraging to be the re-rating catalyst for the stock in the medium term. 

 

Antique maintained ‘Buy’ rating with a target of ₹880, valuing the stock at 16x FY28 earnigs per share (EPS), compared to global peers at 5x-17x (target EV/Ebitda of 6.5x FY28 vs. global peers at 6x-11x).  Anand Rathi noted that UPL shareholders shall receive shares in the new crop protection entity (UPL Global) via demerger, alongside share issuances from merging India (UPL SAS) and international (UPL Corp) crop protection subsidiaries into a new platform. 1:1 entitlement for every UPL share yields one UPL Global share (minor subsidiary merger adjustment), creating two distinct listed entities.  However, the brokerage said, while UPL’s proposed corporate restructuring is strategically sound, it offers limited immediate balance sheet relief. The brokerage noted that absolute debt levels are likely to remain largely unchanged post-transaction, suggesting that the move is more of a value reclassification exercise rather than a genuine balance sheet repair.  

In the near term, the impact is expected to be largely neutral, with any meaningful upside contingent on operational performance and execution over time, rather than on the transaction structure itself. Thus, considering this exercise as largely neutral, Anand Rathi retained 'Buy' rating on the stock with an unrevised target of ₹860.   Additionally, delayed demand growth in key markets, volatile commodity prices, adverse weather condition, and unfavourable forex movement is flaaged as key risks by the brokerage.  

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