Synopsis: The stock price of UPL experienced a 6% decline after the announcement of its Q4 earnings, despite revenue surpassing estimates. The company's EBITDA and PAT also witnessed declines, attributed to lower agrochemical prices. While challenges are anticipated in the first half of the next fiscal year, a recovery is expected later on. Brokerages have adjusted their price targets based on UPL's performance outlook.
The stock price of UPL, a leading provider of agricultural solutions and services, witnessed a significant decline of 6% during today's intraday trade, reaching Rs 501.65 apiece. This downturn followed a recent surge in the stock's value over the past two trading sessions, driven by high expectations surrounding the company's financial results.
In the fourth quarter of fiscal year 2023-24, UPL reported revenue of Rs 140.8 billion, marking a 15% year-on-year decline. Although this figure surpassed the estimated Rs 114.7 billion by domestic brokerage firm Motilal Oswal, it contributed to the stock's downward trend. The drop was attributed to lower agrochemical prices, down 15% year-on-year, and a 2% volume decline.
The company's EBITDA stood at Rs 19.3 billion, significantly higher than the estimated Rs 13.2 billion, representing a 36% year-on-year decrease. However, the EBITDA margin also experienced a decline, dropping by 450 basis points year-on-year to 13.7%. This decline was primarily attributed to a decrease in gross margins, down by 470 basis points year-on-year.
The adjusted profit after tax (PAT) stood at Rs 3.6 billion, contrasting with the estimated loss of Rs 4 billion and marking a 65% year-on-year decrease. Looking ahead, the company expects normalization of the crop protection business in the second half of fiscal year 2024-25 and a robust performance in the seeds business for the entire fiscal year.
Motilal Oswal anticipates a challenging first half of fiscal year 2024-25 for the global agrochemical sector, leading to margin reductions as high-cost inventory is liquidated. However, the latter half of fiscal year 2024-25 is forecasted to witness a recovery in overall demand and pricing dynamics globally.
Factoring in the better-than-expected performance in the fourth quarter and an improving operating scenario in fiscal year 2024-25, the brokerage raised its earnings per share (EPS) estimate for fiscal year 2024-25 by 21% while maintaining its fiscal year 2025-26 EPS estimate.
Centrum Broking and Antique Stock Broking lifted their target prices on the stock following the company's Q4 performance announcements.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of ICCBizNews. We advise investors to check with certified experts before taking any investment decisions.
Related Questions
1. What was the impact of UPL's Q4 earnings on its share price?
The share price of UPL dropped by 6% after the announcement of its Q4 earnings, sparking discussions on investment strategies.
2. What were the key factors contributing to UPL's revenue decline in Q4?
UPL's revenue decline in Q4 was primarily attributed to lower agrochemical prices and a slight decrease in sales volume.
3. What are UPL's projections for revenue growth and EBITDA in the upcoming fiscal year?
UPL anticipates revenue growth of 4-8% and significant EBITDA growth in the upcoming fiscal year, along with a target for cash flow generation.
4. How did brokerages respond to UPL's Q4 performance?
Brokerages provided varying responses to UPL's Q4 performance, adjusting price targets and offering insights into future prospects for investors.
5. What are the implications of the RBI's new guidelines on borrowers?
The RBI's new guidelines aim to provide relief to borrowers by ensuring fair practices in interest calculation and transparent EMI payments.
