The agrochemicals sector in India, valued at approximately USD 33.16 billion in 2023, is projected to grow at a CAGR of 6.5% from 2024 to 2030. Insecticides represent 53% of the market, with paddy and cotton being the largest consumers, accounting for 28% and 20% respectively.
With a market capitalization of Rs 53,844.30 crore, the shares of UPL Limited were trading at Rs 629.50 per share, increasing around 4.17 percent as compared to the previous closing price of Rs 604.30 apiece.
Brokerage recommendations
Investec, one of the well-known brokerages globally, gave a ‘Buy’ call on the agrochemical stock with a target price of Rs 700 apiece, indicating a potential upside of 15 percent from a previous closing price of Rs 604.30 per share.
Rational
Investec is optimistic about UPL, expecting it to reduce debt in FY25. As of September 2024, UPL’s net debt was ₹27,531 crore. The brokerage is confident in UPL meeting its guidance, driven by recovering global demand and a strong focus on operational efficiency.
Moreover, sentiment for UPL improved after Budget 2025 introduced measures to support agriculture, including crop diversification, better irrigation, and enhanced credit access. The Dhan Dhanya Yojana aims to aid 1.7 crore farmers. Higher rural incomes and consumption are expected to benefit UPL, given its strong reliance on the farming sector.
Business Insight
UPL Corp’s Q2 revenue rose 4% YoY, driven by strong fungicide volumes in LATAM and Europe, despite insecticide price erosion in Brazil. NPP BioSolutions grew 10% YoY on biocontrol and nutrient demand. Market fundamentals show normalized ordering but price pressures persist amid Chinese overcapacity.
Margin Guidance and Future Outlook
UPL expects margin gains in Q3 and FY25, supported by stable active ingredient prices, lower input costs, and market share growth. FY25 guidance includes 4-8% revenue growth and over 50% EBITDA growth, driven by lower-cost inventory and rising sales of differentiated products.
New Development
UPL SAS India reported ₹1,013 crore in revenues, up 20% YoY, driven by herbicides and new molecules. Advanta Seeds’ Q2 revenue grew 4% on grain sorghum and corn. UPL focuses on cash generation, working capital optimization, and new launches targeting $85 million in additional revenue.
Ratio Analysis
The company’s profitability measures show a decline in return on equity (RoE) from 13.29 percent in FY 22-23 to (4.83) percent in FY 23-24, while, during the same period return on capital employed (RoCE) decreased from 13.64 percent to 3.72 percent. In contrast, the net profit margin (NPM) was (3.79) percent in fiscal year 23-24.
Company Profile
UPL Limited is engaged in the agro-business of production and sale of agrochemicals, field crops, and vegetable seeds, and non-agro-business of production and sale of industrial chemicals, chemical intermediates, and specialty chemicals.
Written by:- Abhishek Singh
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