UPL shares emerged as Nifty 50’s top loser on Tuesday; Do you want to own it?

Consolidated net profit for the March quarter was reported at ₹792 crore, a 42.6% year-on-year (YoY) decline. The company reported a consolidated net profit of ₹1,379 crore for Q4FY22.

Post-patent product prices, increased supplies from China, and lower sales in North America were the main reasons for the weak quarter.

The company’s consolidated revenue from operations grew by 4.5% 16,569 crores to 15,861 crore during the corresponding quarter of the previous fiscal (Q4FY22).

with a target value of At Rs 925 per share, global brokerage firm Jefferies has maintained its ‘buy’ recommendation on UPL. It claims that due to a sharp decline in operating profit margin (OPM), it missed the estimates for the fourth quarter.

UPL shares tank after disappointing fourth quarter, should you buy or sell?

Let us see what the domestic brokerage firms have to say:

Kotak Institutional Equities

According to the brokerage’s analysis, the company’s Q4FY23 results were well below estimates due to severe margin pressures due to price erosion in post-patent product portfolio and return of Chinese competition.

If the industry’s overcapacity is not reduced, the brokerage predicts that these issues will persist for at least one to two quarters, and possibly even longer.

“We cut FY2024-25E EPS by 16-19%, resulting in cut in our March 2024 FV 690 (from 830), and reduce our rating to ‘Reduce’,” the brokerage said in its report.

Motilal Oswal Financial Services Limited

According to the brokerage, the company reported a revenue growth of 4% YoY for the fourth quarter of FY23, mainly driven by fall in post-patent product prices due to increase in supplies from China and lower sales in the North. Was inspired. America. Due to the liquidation of expensive inventory, idle capacity expenditures to achieve a competitive inventory position, and an unfavorable sector mix, operating performance declined.

“Considering UPL’s weak 4QFY23 performance, we cut our FY24E/FY25E earnings outlook by 13%/9%. We reiterate our ‘Neutral’ rating with a target price of Rs. 750,” the brokerage said in its report.

Nuwama Institutional Equities

The report claims that the company disappointed as its Q4FY23 EBITDA/PAT decreased by 16%/42% YoY and top-line growth of only 4%. Gross margin decreased 900 basis points to 40.7%, primarily due to provision for costlier inventory and an unfavorable product mix.

This puts profitability at risk as it indicates pressure on receivables and inventory losses in the current situation, along with a management estimate of FY24E EBITDA growth of 8-12%.

“We are cutting FY24/25E EPS by 22/8%. Even as we accept the risk to earnings, we anticipate continued balance sheet improvement, while affordable valuations protect downside risk. However At current valuations of 10.2x FY25E EPS, we believe the stock avoids downside risk, not to mention continued improvement in the balance sheet. We retain ‘Buy’ while retaining the target multiple at 13x with a revised target price Are 966,” the brokerage said in its report.

Elara Capital

“FY24 could remain challenging for UPL due to higher interest rates, sharp reduction in technology prices and weak demand. We reduce our EBITDA estimates by 16% for FY24E and 15% for FY25E and our PAT estimates by 22% for FY24E and 13% for FY25E. We reiterate ‘Buy’ with a lower target price of since 936 1,004 based on 7x (unchanged) FY25E EV/EBITDA, but the stock could weaken in the near term due to near-term challenges in the global agrochemicals industry,” the brokerage said in its report.

UPL Q4FY23 results: 42.6% fall in net profit, dividend declared