Saturday, June 27, 2009

CMP Rs 155.75

Equity Rs 87.91Cr Face Value Rs 2 Debt-Equity Ratio = 0.57 Book Value Rs 60.26 EPS Rs 10.60

United Phosphorus Limited (UPL) (incorporated in 1969 ) is a crop protection, chemicals and seeds company, headquartered in Mumbai. UPL and Advanta, the two companies in their group, are listed on the Indian stock exchange, with a combined market capitalization of approx $2.5 billion. Integrating the companies is more difficult than acquiring them and UPL has managed it quite well so far. 

UPL is a leading global producer of crop protection products, intermediates, specialty chemicals and other industrial chemicals. UPL has its presence across value added Agri inputs ranging from seeds to crop protection and post harvest activity.

UPL is - 
  • The largest manufacturer of agrochemicals in India
  • Offers a wide range of products that includes insecticides, Fungicides, Herbicides, Fumigants,PGR and Rodenticides. 
  • Operates in every continent and has customer base in 86 countries. 
  • Ranks amongst the top 5 post- patent agrochemical manufacturers in the world.
  • Developer of more than 100 insecticides, fungicides, herbicides, fumigants and rodenticides for every stage of the growing cycle

United Phophorus Limited has the widest range of generic agrochemical and other chemical intermediates

FY09 Performance:-
Since FY02, the company recorded a growth rate of 29% in revenues and 55% in profits. Its FY09 revenues grew 32% driven both by higher volumes & higher prices and Profits after Tax grew 73%. 
Diverse Geographical Mix:-
UPL doesn't depend on a specific country/continent to a large extent as the revenues look quite diversified over different regions:- Europe (32% of FY09 revenues), US (22%), India (21%) and ROW (26%). In addition to it, all these regions have shown growth in FY09.

Necessity of Crop-protection:-
Agri-chem demand is sensitive to factors like weather, commodity prices, government farm support and spread of Genetically Modified crops (GM Crops). Even though there is no strict relationship between the agri-commodity prices and growth of crop-protection industry, the rise in prices of agri-commodity does improve the profitability of the farmers and it in turn can enhance their usage of crop-protection products, resulting in an overall growth of the industry. UPL has grown handsomely in recent years, not just because of acquisitions but also because of its fantastic organic growth and having a global footprint, it has a great opportunity to increase its market share to new levels.With people becoming aware of scarcity of water in the world and Indian monsoon playing truant this season, crop-protection and GM Crops are need of the hour and this is where UPL may have a point to prove.

Technical Outlook:-
The stock is in a firm uptrend since October'08 when it hit low of Rs 65 amid overall market panic. But after that it formed a strong base for 4-5 months to start current rally. The stock trades near Rs 155 and looks strong to touch Rs 185-190 levels in short-term, one can keep stop loss at Rs 140 to protect capital. 
Investors can accumulate this stock at CMP and even in dips for 1-2 year target of Rs 232.

1 comment:

Anonymous said...

isnt debt/equity a concern for UP ?