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United Phosphorus Limited (UPL), incorporated in 1969, is a leading global producer of
crop protection products, intermediates, specialty chemicals and other industrial chemicals.
UPL is present across the value added Agri inputs, ranging from seeds to crop protection
and post harvest activity. It is the largest manufacturer of agrochemicals in India and offers a
slew of products that includes insecticides, fungicides, herbicides, fumigants, PGR and
rodenticides. The customer base is spread across 86 countries and the company ranks
amongst the top 5 post – patent agrochemical manufacturers in the world.
INVESTMENT THESIS
• Company is one of the largest global generic players in crop protection. It has
expanded its product profile and strengthened its distribution network through
strategic acquisitions (both company and product) in key and emerging markets. The
company is now well poised to leverage the increasing conversion to generics
globally.
• Well integrated operations of United Phosphorus coupled with adherence to
international technical and quality control norms has enabled it to gain a strong
foothold in the global market. With this it de-risks its business as international
markets contribute over 75% to its revenues.
• Its recent acquisitions of Mancozeb (brand acquisition from Dow in June 2010) and
RiceCo (rice herbicide specialist acquired in December 2010) are expected to add
~US$100m to revenues in FY11. These acquisitions strengthen its presence in these
molecules and provide access to markets (Latin America access due to Mancozeb)
and ability to cross-sell (rice herbicides through RiceCo's network).
• Benefits of restructuring at Cerexagri, the Spain plant and at Rotterdam would be
visible in 4QFY11 and FY12 numbers.
Valuations: Company witnessed positive operational performance in FY10 unlike a
year ago. We expect strong momentum in profitability given the healthy margins and
robust business growth. Also, the business environment for the agro-chemical industry
has been improving gradually. Stock trades at just 11.46x and 8.75x multiple of our
estimated FY11E & FY12E EPS of Rs. 12.3 and Rs. 16.1. Hence, we recommend BUY on
United Phosphorus.
TECHNICAL VIEW: Buy around Rs 132-137 with a strict SL of below Rs
124. Target Price is Rs 178 with the time frame of 12 months.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
United Phosphorus Limited (UPL), incorporated in 1969, is a leading global producer of
crop protection products, intermediates, specialty chemicals and other industrial chemicals.
UPL is present across the value added Agri inputs, ranging from seeds to crop protection
and post harvest activity. It is the largest manufacturer of agrochemicals in India and offers a
slew of products that includes insecticides, fungicides, herbicides, fumigants, PGR and
rodenticides. The customer base is spread across 86 countries and the company ranks
amongst the top 5 post – patent agrochemical manufacturers in the world.
INVESTMENT THESIS
• Company is one of the largest global generic players in crop protection. It has
expanded its product profile and strengthened its distribution network through
strategic acquisitions (both company and product) in key and emerging markets. The
company is now well poised to leverage the increasing conversion to generics
globally.
• Well integrated operations of United Phosphorus coupled with adherence to
international technical and quality control norms has enabled it to gain a strong
foothold in the global market. With this it de-risks its business as international
markets contribute over 75% to its revenues.
• Its recent acquisitions of Mancozeb (brand acquisition from Dow in June 2010) and
RiceCo (rice herbicide specialist acquired in December 2010) are expected to add
~US$100m to revenues in FY11. These acquisitions strengthen its presence in these
molecules and provide access to markets (Latin America access due to Mancozeb)
and ability to cross-sell (rice herbicides through RiceCo's network).
• Benefits of restructuring at Cerexagri, the Spain plant and at Rotterdam would be
visible in 4QFY11 and FY12 numbers.
Valuations: Company witnessed positive operational performance in FY10 unlike a
year ago. We expect strong momentum in profitability given the healthy margins and
robust business growth. Also, the business environment for the agro-chemical industry
has been improving gradually. Stock trades at just 11.46x and 8.75x multiple of our
estimated FY11E & FY12E EPS of Rs. 12.3 and Rs. 16.1. Hence, we recommend BUY on
United Phosphorus.
TECHNICAL VIEW: Buy around Rs 132-137 with a strict SL of below Rs
124. Target Price is Rs 178 with the time frame of 12 months.
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