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United Phosphorus (UNTP)
Others
Positive cues from Syngenta results. Syngenta reported 3Q2011 crop protection
sales growth of 19% at constant currency, with volume/pricing growth at 16/3%, led
by 21% growth in Americas and 14-16% in Europe and APAC. Syngenta expects
positive pricing to be maintained in crop protection in 2012, targeting mid-single digit
price increase. We think this is positive for UPL as our sales growth estimates of 25/12%
for FY2012/13E are largely based on volume growth; positive pricing will be an upside
and will aid in countering gross margin pressure witnessed in 1QFY12. BUY; PT Rs220.
Syngenta reports strong volume growth and positive pricing in crop protection
Syngenta reported 3Q2011 results on Friday which beat analyst expectations. We examine its crop
protection results in detail. It reported 19% constant currency growth in crop protection comprising
volume and pricing growth of 16% and 3%, respectively. 16% volume growth is particularly
strong due to a high base of 18% volume growth in 3Q2010. Pricing growth of 3% came on the
back of 7% pricing decline in 3Q2010 indicating positive momentum after several quarters of
pricing decline, in line with Syngenta guidance of positive pricing in 2H2011. In 1Q2011, Syngenta
reported negative pricing of 3% and took subsequent price increases to counter this decline.
Outlook for 2012 is good—positive pricing indicated
Based on the strong start to the season in Latin America, Syngenta expects (1) continued volume
momentum in the fourth quarter on a high base (4Q2010 volume growth was around 18%),
(2) stable crop protection pricing in 2011 (2010 crop protection pricing declined by 6%) and
(3) price increases in 2012, with Syngenta targeting mid-single digit price increase.
Strong growth in LA + positive pricing reported by Syngenta = positive for UPL
The key takeaways from Syngenta results are (1) the positive momentum in pricing. UPL revised its
FY2012E sales growth guidance to 25-30% from 12-14% due to the addition of sales from
acquisition of DVA Agro in Brazil in 1QFY12. We estimate sales growth of 25%, lower-end of
guidance driven mainly by volume growth (volume growth was 25% in 1QFY12) and believe any
positive pricing will be an upside; (2) strong sales growth in Latin America of 21% in 3Q2011 by
Syngenta is positive as we believe this is the fastest growing region for UPL, partly boosted by the
four acquisitions concluded over the past 12 months.
UPL—2QFY12E results on October 21, we expect PAT of Rs1.3 bn (ex-forex)
While this is seasonally a weak quarter for UPL, we expect overall sales growth at 22% led by
India and Latin America with flat yoy EBITDA margin and PAT of Rs1.3 bn, excluding forex. We
expect 22% EBITDA growth but lower PAT growth of 14% due to higher interest costs. However,
(1) large forex impact due to forex debt (65-70% of total debt of Rs30 bn) and (2) higher interest
costs could dampen 14% PAT growth expected in 2QFY12E.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
United Phosphorus (UNTP)
Others
Positive cues from Syngenta results. Syngenta reported 3Q2011 crop protection
sales growth of 19% at constant currency, with volume/pricing growth at 16/3%, led
by 21% growth in Americas and 14-16% in Europe and APAC. Syngenta expects
positive pricing to be maintained in crop protection in 2012, targeting mid-single digit
price increase. We think this is positive for UPL as our sales growth estimates of 25/12%
for FY2012/13E are largely based on volume growth; positive pricing will be an upside
and will aid in countering gross margin pressure witnessed in 1QFY12. BUY; PT Rs220.
Syngenta reports strong volume growth and positive pricing in crop protection
Syngenta reported 3Q2011 results on Friday which beat analyst expectations. We examine its crop
protection results in detail. It reported 19% constant currency growth in crop protection comprising
volume and pricing growth of 16% and 3%, respectively. 16% volume growth is particularly
strong due to a high base of 18% volume growth in 3Q2010. Pricing growth of 3% came on the
back of 7% pricing decline in 3Q2010 indicating positive momentum after several quarters of
pricing decline, in line with Syngenta guidance of positive pricing in 2H2011. In 1Q2011, Syngenta
reported negative pricing of 3% and took subsequent price increases to counter this decline.
Outlook for 2012 is good—positive pricing indicated
Based on the strong start to the season in Latin America, Syngenta expects (1) continued volume
momentum in the fourth quarter on a high base (4Q2010 volume growth was around 18%),
(2) stable crop protection pricing in 2011 (2010 crop protection pricing declined by 6%) and
(3) price increases in 2012, with Syngenta targeting mid-single digit price increase.
Strong growth in LA + positive pricing reported by Syngenta = positive for UPL
The key takeaways from Syngenta results are (1) the positive momentum in pricing. UPL revised its
FY2012E sales growth guidance to 25-30% from 12-14% due to the addition of sales from
acquisition of DVA Agro in Brazil in 1QFY12. We estimate sales growth of 25%, lower-end of
guidance driven mainly by volume growth (volume growth was 25% in 1QFY12) and believe any
positive pricing will be an upside; (2) strong sales growth in Latin America of 21% in 3Q2011 by
Syngenta is positive as we believe this is the fastest growing region for UPL, partly boosted by the
four acquisitions concluded over the past 12 months.
UPL—2QFY12E results on October 21, we expect PAT of Rs1.3 bn (ex-forex)
While this is seasonally a weak quarter for UPL, we expect overall sales growth at 22% led by
India and Latin America with flat yoy EBITDA margin and PAT of Rs1.3 bn, excluding forex. We
expect 22% EBITDA growth but lower PAT growth of 14% due to higher interest costs. However,
(1) large forex impact due to forex debt (65-70% of total debt of Rs30 bn) and (2) higher interest
costs could dampen 14% PAT growth expected in 2QFY12E.
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