New Delhi: UPL was among the top Nifty losers as the stock fell over 9 per cent on Monday after its operating performance fell short of expectations.
UPL shares were trading at Rs 482.85, down 9.8 per cent. The lower circuit is at 10 percent. UPL shares hit a 52-week low on Monday. The company has a market capitalization of Rs 36,735.31 crore.
Motilal Oswal Financial Services said in a report that UPL reported another weak quarter, with a 28 per cent year-on-year decline in revenue. It was mainly attributed to a continued downward trend in agrochemical prices (down 24 percent year-on-year), which led to continued destocking of inventory by distributors (volumes down 5 percent year-on-year). All regions (except the Rest of the World) saw sales decline from at least 20 percent (India) to 64 percent (North America). Sales from the rest of the world grew 12 percent year-on-year.
Gross debt (excluding perpetual bonds) increased to Rs 361.7 billion in Dec 23 from Rs 328 billion in Dec 22. Net debt (excluding perpetual bonds) increased to Rs 313.5 billion Rs. according to the report.
“We see near-term challenges in the global agrochemical industry due to: a) the build-up of high inventory as distributors opt for tactical needs-based purchasing, and b) falling agrochemical prices led by aggressive price competition from Chinese (post-patent) exporters. Taking into account near-term challenges, cash flow generation and debt payments remain the main monitorable elements,” the report says.
UPLL expects 4QFY24 to be weaker YoY; however, it expects quarterly margin improvement. Management expects normalized business performance in 2QFY25.
Management expects the pricing challenge to continue in the near term. UPLL is seeing a rebound in volumes in Latin America and double-digit revenue growth in the rest of the world region, according to the report.