United Phosphorus Topline growth returns BUY :Emkay

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United Phosphorus

Topline growth returns

BUY

CMP: Rs166                                        Target Price: Rs215

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n     Q1FY12 results were in line at the EBITDA level however higher interest costs squeezed APAT. UPL reported revenues of Rs 18.6bn, +27% yoy , APAT of Rs 1.68bn, -13% yoy

n     RoW & India remain strong. North American markets improved. Europe returned to positive growth after 7 consecutive quarters of degrowth

n     Management upped revenue guidance to 25-30% (previous 12-14%) post DVA acquisition. EBITDA margin guidance maintained at 20-21% 

n     Revise estimates to factor in DVA acquisition. Maintain margins at previous level of 20.2%. However, higher interest costs lead to EPS decline of 6% in FY12E.