UPL Q1 Results Review - Higher Agrochemical Inventory Continues To Dampen Performance: Motilal Oswal

Motilal Oswal Report

UPL Ltd. reported weak Q1 FY24 performance with a 17% YoY decline in revenue. This was primarily attributed to a decrease in agrochemical prices (down 10% YoY) and lower volumes (down 9% YoY) due to higher inventory across channels.

This led to lower sales in North America (down 52% YoY), Europe (down 27% YoY), and Latin America (down 14% YoY).

Gross debt (excluding perpetual bond) decreased to Rs 300.8 billion in June 2023 versus Rs 301.2 billion as on June 2022, while net debt (excluding perpetual bond) declined to Rs 261.94 billion in June 2023 versus Rs 264.8 billion in June 2023 (i.e., reduced by $160 million).

Factoring in UPL’s weak Q1 FY24 performance, we cut our FY24E/FY25E earnings by 7%/8%.

We reiterate our 'Neutral' rating on the stock with a target price of Rs 670.

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