MOSL: UPL (Buy)-Consistently outperforming industry-Steady growth across geographies-focus to be on product innovation
UPL: Consistently outperforming industry; Steady growth across geographies; focus to be on product innovation
(UPLL IN, Mkt Cap USD5.8b, CMP INR754, TP INR945, 25% Upside, Buy)
- In-line revenue, minor beat on adj. PAT: UPLL's revenue grew 6.5% YoY to INR56.9b (est. of INR58.9b). EBITDA margin expanded 30bp YoY to 21.4% (est. of 21.8%), led by gross margin expansion of 90bp YoY to 49%. EBITDA grew 8.2% YoY to INR12,180m (est. of INR12,854m). Adj. PAT fell 9.5% YoY to INR7,650m (est. of INR7,145m) in 4QFY18 due to a significant increase in the tax rate to 17.7% from 7.1% in 4QFY17. For FY18, revenue grew 6.5% YoY to INR173.8b. EBITDA margin expanded 40bp YoY to 20.2% in FY18, led by gross margin expansion of 120bp. Adj. PAT, thus, rose 8% YoY to INR21b.
- Product innovation - a key trigger: UPLL has been focusing on innovative products to not only diversify its portfolio, but also overcome the issue of pest resistance. UPLL successfully launched Tripzin, Sperto and Triziman in the last sowing season, in line with its strategy to focus on product innovation. Moreover, the two fungicides launched in India last year have been received well, and the success of Satellite and Lifeline in North America has allowed the company to launch them in Turkey as well.
UPL is a global producer of crop protection products, intermediates, specialty chemicals and other industrial chemicals based in India. Co. offers a range of products that includes insecticides, Fungicides, Herbicides, Fumigants, PGR and Rodenticides. Co. manufactures and markets Caustic Chlorine, White Phosphorus, Industrial Chemicals, Specialty Chemicals and is engaged in Captive Power Generation of 48.5 MW. Co. maintains a range of generic agrochemical and other chemical intermediates which are exported to more than 100 countries in the world.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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