UPL - Enriched Growth; Visit Note :: Edelweiss

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

��

-->

We recently met the UPL management to get an update on the company’s business and a sense on the industry scenario. During FY15, the company continues to maintain sales growth of 12-15% YoY primarily driven by new product launches across geographies, coverage of new crops and market share gains. Further, it anticipates integration of acquired subsidiaries and enhanced branded portfolio contribution to spur EBITDA margin over the long term. Meanwhile, it expects the steep correction in crude oil price to be a short-term EBITDA margin kicker. The company plans to cut gross debt by INR5bn in FY15E riding robust cash flow.

New product launches, market share gains to drive growth

During FY15, the company continues to maintain sales growth of 12-15% YoY primarily driven by new product launches across geographies, coverage of new crops and market share gains. Europe, US and LATAM geographies are performing as per management expectations. However, in India, the rabi crop is facing challenges on account of lower acreage, higher channel inventory and subdued demand.

EBITDA margin to get growth kicker; debt cut plan on track

UPL estimates EBITDA margin to jump 60-100bps YoY in FY15 (versus our 50bps jump estimate) riding superior operating leverage. It anticipates the EBITDA margin to improve further over the long term riding: (1) integration in acquired subsidiaries; and (2) rising contribution of branded portfolio. The company plans to cut gross debt by INR5bn in FY15E riding robust cash flow.