The shares of this agrochemical stock engaged in the business of industrial chemicals, agrochemicals, specialty chemicals, chemical intermediates, and production was up 2 percent in opening trade after plans to sell a $250 million stake in Advanta and Right Issue of Rs. 3,377.74 crore.
Share Price Movement
The share price of UPL Ltd on Thursday was trading at Rs. 543.75 and touched a day’s high of Rs.557.65 per share. The stock has delivered a negative return of around 1.52 percent thus underperforming the index. However, the shares have adjusted from the day’s high and were trading at 0.76 percent higher than the previous closing price of Rs. 546.85 per share.
What Happened
The stock movement in the scrip was due to the company’s plans to sell a $250 million stake in Advanta and Right Issue.
The company announced the sale of an 8.93% stake in Advanta Enterprises, a subsidiary of UPL to Alpha Wave (a Venture Capital Firm) for a cash consideration of $250 million at an equity valuation of $2.7 billion. Further, there will be a fresh issue from Advanta to Alpha Wave for cash consideration of $100 million for 3.51 percent of the stake with an equity valuation of $2.85 billion. All these transactions are subjected to approval from the Competition Commission of India.
Further, the company plans to raise funds by issuing partly paid equity shares through right issue worth Rs. 3,377.74 crore with an issue price of Rs. 360 per share. The record date is set on Tuesday 26th November 2024. The Right Issue opening date was 5th December 2024, Thursday and the closing date was 17th December 2024, Tuesday.
The share before the issue will be around 75,06,07,641 equity shares and post post-right issue will be around 84,44,33,596 equity shares (Assuming full subscription). The Rights entitlement ratio is for every eight shares held by the shareholder they are eligible for one right share.
Management Commentary
Based on the Stake sale, Jai Shroff the Group CEO of UPL, said about partnering with Alpha Wave on Advanta, highlighting its role as a leader in sustainable agriculture solutions. He highlighted that Advanta operates under the ‘farmer first’ principle, tailoring solutions to meet farmer’s needs while promoting food security and developing climate-smart crops.
Rick Gerson, co-founder and Chairman of Alpha Wave Global shared his words about collaborating with Jai Shroff and the Advanta team. He noted the importance of maintaining Advanta’s outstanding reputation and execution history as they work together to grow the company thoughtfully.
Navroz D. Udwadia, Co-Founder and Partner of Alpha Wave Global remarked on the investment in Advanta as a strategic move focused on R&D. He believes that Advanta’s combination of organic growth and potential acquisitions positions it well for future success, leading up to a possible IPO.
Financials
According to its recent filing, In Q2FY25, UPL Ltd reported a 9 percent increase in revenue to Rs.11,090 crore in Q2FY25, compared to Rs.10,170 crore in Q2FY24. Furthermore, quarterly, the company saw an increase of 22.31 percent in revenue from Rs.9,067 crore in Q1FY25.
In the same period, the company reported an increase in net losses to Rs.585 crore in Q2FY25, as losses widened from Rs.293 crore in Q2FY24 and stayed consistent from a loss of Rs.527 crore in Q1FY25.
The company has a current ratio of 1.35, a debt-to-equity ratio of 1.23, and a price-to-sales of 0.90 currently.
Revenue Mix
The company earns 84.65 percent from Crop protection, 9.97 percent from the Seeds business, and 5.36 percent from Non-agro as of Q2FY25. Most of the profits are derived from crop protection.
Shareholding Pattern
As of September 2024, the shareholding pattern includes promoters holding a share of 32.51 percent stake in UPL, Foreign Institutional Investors (FII) holding around 34.22 percent, Domestic Institutional investors (DII) standing at 17.64 percent, and public holdings standing at 15.59 percent.
About the company
UPL Limited, formerly known as United Phosphorus Limited is into agrochemicals, specialty chemicals, and industrial chemicals. The company was founded in 1969 and is headquartered in Mumbai. They operate in over 130 countries, providing a diverse range of products including seeds, pesticides, and plant growth regulators.
Their business model focuses on leveraging a robust R&D framework and strategic acquisitions, such as Arysta LifeScience. They aim to empower farmers with effective solutions while ensuring food security and environmental sustainability.
Written by – Santhosh S
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