UPL shares in demand after Alpha Wave Global buys 12% stake in subsidiary

Shares of agrochemical firm, UPL gained up to 3 per cent at Rs 563.30 a piece on the BSE in Thursday’s intraday deals after the company on Tuesday announced an investment of $350 million by Alpha Wave Global, a leading global investment firm. 

 

UPL, the agriculture solutions provider said that it has signed an definitive agreement with the investment firm under which Alpha Wave Global will invest $350 million to acquire approximately 12.5 per cent stake in Advanta Enterprises, a subsidiary of UPL and a seed company that delivers innovative farming solutions and technology to farmers around the world. 

 

The transaction is a combination of a primary investment of $100 million and a secondary sale of shares of $250 million in Advanta by UPL. 

 

“The primary proceeds will be used to advance Advanta’s growth through organic and inorganic initiatives, capitalising on its superior competitive positioning and robust tailwinds within the global seeds industry. The secondary proceeds will be utilised by UPL to deleverage its balance sheet in alignment with its articulated financial objectives,” the company said in a statement. 

 

This transaction marks the second investment by a global investor in Advanta, following a $300 million investment by global investment firm KKR in October 2022.

 

In a separate exchange filing on Wednesday, the company said that its board of directors have approved the fundraising of up to Rs 3,380 crore through a rights issue in the ratio of 1 share for every 8 shares held, at a price of Rs 360 per share. The rights issue is scheduled to open on December 5 and close on December 17. 

 

Q2 results

The company reported a consolidated net loss of Rs 443 crore for the quarter ended September 30, widening from a loss of Rs 189 crore in the same period last year. Revenue from operations grew 9.1 per cent year-on-year to Rs 11,090 crore, while total expenses increased by 10.9 per cent to Rs 11,510 crore.

 

UPL, after reporting its second consecutive quarter of revenue growth following four quarters of decline, has projected a 4-8 per cent revenue growth for fiscal 2025.

 

UPL share price history

The company’s stock has underperformed the market year to date as it has fallen 5 per cent, while staying flat in the last one year. In comparison BSE Sensex has risen 6.5 per cent year to date and 16.8 per cent in a year. 

 

The company has a total market capitalisation of Rs 42,920.25. UPL shares are trading at a price to earnings multiple of 172.85 times and at an earning per share of Rs 3.25. 

 

At 1:57 PM; the shares of the company were up 2.72 per cent at Rs 561.75 a piece. By comparison, the BSE Sensex was down 0.58 per cent at 77,131.15 level.