The agrochemical industry is a crucial sector that plays a significant role in modern agriculture by providing products that enhance crop yield, protect plants from pests and diseases, and improve soil fertility.
A research report by Infosys predicts that the market for pesticides and other agrochemicals will expand from $102.9 billion in 2023 to $169.8 billion by 2028, reflecting an annual growth rate of over 10 percent. Herbicides are expected to hold the largest share of the market by function.
Price Action
The shares of UPL Ltd, with a total market capitalization of Rs 48,176.14 Crore on Thursday, were trading at Rs 642 per share, which was 2 percent lower than the previous closing of Rs 654. The shares of UPL Ltd have generated a 26 percent return in the past three months, a 42 percent return in the past year, and a 118 percent return in the past five years.
Managment Guidance
The management is confident in maintaining guidance for FY25 on revenue, EBITDA, and free cash flow. It has maintained its 50 percent growth guidance in its EBITDA and 4 to 8 percent growth in revenue for the year, despite posting a Net loss in Q2FY25.
Management anticipates continued headwinds related to easing prices of agri-commodity but are still optimistic about their operational efficiencies supported by refreshed inventory and growing demand for their products driving margins. The company is confident about their innovation pipeline, with around $85 million of new product launches in FY25, with more new products under way for the next two years.
Key Developments
The company had successfully raised Rs 844 Crore through a rights issue, which was oversubscribed 2 times in December 2024. Additionally, the subsidiary of UPL Ltd, Advanta Enterprises Ltd, secured a $350 million investment from a global investment firm, Alpha Wave Global, enhancing its growth prospects.
Also read: Real estate stocks crash after Maharashtra state Govt raises ready reckoner rate
Financials
The company reported an increase of 10.3 percent YoY in revenue from operations from Rs 9,887 Crore in Q3FY24 to Rs 10,907 Crore in Q3FY25. It reported a Net profit of Rs 853 Crore in Q3FY25 as against a Net loss of 1,607 Crore in Q3FY24.
Brokerage Targets & Rationale
Brokerage firm Investec upgraded its rating on UPL from its previous rating of “sell” to a “buy” rating. It also increased its price target from Rs 450 per share to Rs 700. It noted that the company will achieve its guidance backed by recovery in global macro demand and operational efficiency.
Incred in its Brokerage note on March 15 also raised its price target from Rs 754 per share to Rs 1,289 and maintained its “add” recommendation on the stock. This implies a potential upside of 98 percent from the current levels. The brokerage anticipates an 11 percent CAGR in revenue from FY25- FY27.
Incred highlighted that the global agrochemical cycle is recovering, and with restocking under development, crop protection companies will witness volume growth in the coming years.
About UPL Ltd
UPL Ltd is a leading Indian multinational company specializing in agrochemicals and sustainable agricultural solutions. It manufactures and markets crop protection products, seeds, seed treatment solutions, post-harvest solutions, and industrial chemicals. It offers over 14,000 registered products, including fungicides, herbicides, insecticides, and plant growth regulators.
Written By Adhvaitha Nayani
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
