On May 9, Agri-input company UPL Limited fell over 2% as brokerages cut its earnings after the firm posted weak earnings for the March quarter.
The major drag to the proceeds was a one-time loss, weak operational metrics, and less growth in the Latin American market.
At 9:42 am, the stock was quoting at Rs 702 on the BSE, down 1.8% from its previous close, while the benchmark Sensex stepped up 0.11% to 61832.20 points.
The company’s combined net profit for the January-March quarter rose 43% from the previous year to Rs 792 crore. The numbers were far below the Street at Rs 1,718 crore, reflecting an 11% rise from Rs 1,379 crore in the same quarter in FY21-22.
Revenue for UPL increased 4% in Q4FY22-23 to Rs 16,569 crore, but that, too, belied expectations of a 6% rise. The management has guided for 6% to 10% revenue growth and 8% to 12% EBITDA growth for FY24. The first Q1 and Q2 are predicted to be challenging for the same reasons that depressed performance in Q4.
Kotak Institutional Equities downgraded UPL to reduce, lowering its target price to Rs 690 from Rs 830. Kotak said its earnings came in sharply on acute margin pressures amid price erosion in the post-patent product portfolio due to a resurgence in competition from India. The brokerage house has cut earnings per share by 16% to 19% for FY24-25.
Motilal Oswal Securities cut its earnings by 13% to 9% for FY24-25. Motilal has repeated its neutral rating on UPL, keeping its target price at Rs 750 per share. It expects revenue of 5%, EBITDA of 6%, and Adj PAT CAGR of 10% over FY23-25.
Jefferies India revised its earnings forecast downwards by 7% and 3% for FY24-25E, citing lower margins amid continued market headwinds in the first half of FY24.
It now expects FY23-26 EBITDA CAGR of 8% to 9% but forecasts sales CAGR at 25%+, driven by deleveraging. It has repeated its buy rating on inexpensive valuation with a revised target of Rs 925 per share.