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United Phosphorus (UNTP)
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Sales growth in line; PAT miss due to lower margin/forex loss. Sales growth at
10% was in line with our est. Our 2QFY11 PAT estimate at Rs1.3 bn was lower than
the Street estimate of Rs1.4-1.6 bn, UPL missed our estimate due to lower margin at
18.5%, 120 bps lower than our estimate and forex loss. Excluding forex loss, PAT was
4% lower than our est. (1) Higher-than expected sales growth in India/ROW in 2QFY11
which is likely to sustain, (2) combined with growth picking up in NA/EU reassures us
that UPL will report a much stronger 2HFY11E. We, therefore, increase our FY2011-12E
PAT by 5%. However, we forecast sales growth of 11% in FY2011E, lower than UPL
guidance of 15% (UPL missed its FY2010 guidance). We increase PT to Rs235, maintain BUY
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