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UPL acquires 50% stake in Sipcam
United Phosphorus (UPL) has announced the acquisition of 50% stake in Sipcam Isagro
Brazil (Sipcam) from Isagro. The acquisition would help UPL in further consolidating and
increasing its business in one of the biggest markets of Latin America. Sipcam is a 50:50
JV between Sipcam-Oxon Group and Isagro. The company is one of the niche players in
the US $7bn Brazilian agrichemical market. We estimate Sipcam to have annual sales of
~`600cr (CY2009). Management has neither disclosed the size nor the sales figure of the
deal. However, considering the company’s under-leverage balance sheet (0.2x), we
believe funding for the acquisition should not be an issue. At the CMP of `136, the stock is
trading at 11x and 9x its FY2011 and FY2012 earnings estimates. We continue to
maintain our Buy rating on UPL with a target price of `198.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UPL acquires 50% stake in Sipcam
United Phosphorus (UPL) has announced the acquisition of 50% stake in Sipcam Isagro
Brazil (Sipcam) from Isagro. The acquisition would help UPL in further consolidating and
increasing its business in one of the biggest markets of Latin America. Sipcam is a 50:50
JV between Sipcam-Oxon Group and Isagro. The company is one of the niche players in
the US $7bn Brazilian agrichemical market. We estimate Sipcam to have annual sales of
~`600cr (CY2009). Management has neither disclosed the size nor the sales figure of the
deal. However, considering the company’s under-leverage balance sheet (0.2x), we
believe funding for the acquisition should not be an issue. At the CMP of `136, the stock is
trading at 11x and 9x its FY2011 and FY2012 earnings estimates. We continue to
maintain our Buy rating on UPL with a target price of `198.
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