Mehabe score: 6 G Factor: 3 Piotski Score: 8 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 8.
Description
UPL is principally engaged in the business of agrochemicals, industrial chemicals, chemical intermediates, speciality chemicals and production and sale of field crops and vegetable seeds.
Main Points
Global Leadership#
UPL has its presence across 138+ nations and is the 5th largest Agro chemical company and 4th largest seed manufacturing company in the world. UPL has market access to 90%# of the world’s food basket and is a global provider of sustainable agriculture products and solutions with an annual revenue exceeding 5 Bln $.Site:UPLMain Symbol:UPL
Stock trades at 838.0, above its 50dma 780.79. It also trades above its 200dma 639.01. The stock remains bullish on techicals
The 52 week high is at 864.75 and the 52week low is at 399.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– has been maintaining a healthy dividend payout of 26.62%
-‘s median sales growth is 16.19% of last 10 years
Weakness
– Stock is trading at 3.06 times its book value
– might be capitalizing the interest cost
Competition
– The industry trades at a mean P/E of 33.2x. Sumitomo Chemi. trades at the industry’s max P/E of 64.27x. UPL trades at a P/E of 21.1x
– Industry’s mean G-Factor is 4.1 while the mean Piotski score is 9.0. UPL has a G-Factor of 3 and Piotski scoreof 8.
– Average 1 month return for industry is 4.1%. The max 1- month return was given by Sumitomo Chemi.: a return of 15.56 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 12796.0 cr compared to Rs 11141.0 cr for period ended Mar 2020, a rise of 14.9%
Operating Profits reported at Rs 2651.0 cr for period ended Mar 2021 vis-vis 1904.0 for period ended Mar 2020 .
Operating Margins expanded 362.7 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 13.91 compared to Rs 10.39 for previous quarter ended Dec 2020 and Rs 8.08 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 38694.0 cr for period ended Mar 2021 vis-vis sales of Rs 35756.0 cr for the period ended Mar 2020, a growth of 7.6%. The 3 year sales cagr stood at 30.6%.
Operating margins expanded to 22.0% for period ended Mar 2021 vis-vis 19.0% for period ended Mar 2020, expansion of 300.0 bps.
Net Profit reported at Rs 2871.0 cr for period ended Mar 2021 vis-vis sales of Rs 1776.0 cr for the period ended Mar 2020, rising 38.1%.
Company recorded a healthy Net Profit CAGR of 12.4% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 16.0% compared to 15.0% over the last 3 Years. – The stock has given a return of 92% on a 1 Year basis vis-vis a return of 31% over the last 3 Years. – The compounded sales growth on a TTM bassis is 8% vis-vis a compounded sales growth of 31% over the last 3 Years. – The compounded profit growth on a TTM basis is 42% vis-vis a compounded profit growth of 13% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has risen for the period ended Mar 2021. The Mar 2021 fii holding stood at 37.83% vis-vis 35.36% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 18.28% vis-vis 20.15% for Dec 2020
Conclusion
– has been maintaining a healthy dividend payout of 26.62%
-‘s median sales growth is 16.19% of last 10 years – Stock is trading at 3.06 times its book value
– might be capitalizing the interest cost
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 780.79 and is trading at 838.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
