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Recommendations India

United Phosphorous 4QFY2014 performance highlights and results update

April 29, 2014, Tuesday, 16:39 GMT | 11:39 EST | 20:09 IST | 22:39 SGT
Contributed by Angel Broking


United Phosphorous (UPL) posted a robust set of numbers for 4QFY2014. The company posted net sales of Rs.3,296cr V/s Rs.2,773cr in 4QFY2013, posting a yoy growth of 18.9%. On the operating front, it posted an EBIDTA margin of 19.1% V/s 17.6% in 4QFY2013, an expansion of 150bp. The Gross Margins came in flat at 47.6%. Thus the main reason for the margin expansion is a 2.5% yoy dip in employee expenses, whereas the other expenses rose by 18.8% yoy. During the quarter, the company had exceptional items to the extent of Rs.25.1cr and prior period adjustments to the extent of Rs.15.6cr, adjusted for which, the net profit came in at Rs.401cr V/s Rs.311cr in 4QFY2013, posting a yoy growth of 29.1%. For FY2015, the Management has guided for a 12-15% sales growth yoy, with margin expected to expand by 60-100bp. We maintain our Buy recommendation with a price target of Rs.353.

Robust numbers: UPL posted a robust set of numbers for 4QFY2014. The company posted net sales of Rs.3,296cr V/s Rs.2,773cr in 4QFY2013, posting a yoy growth of 18.9%. On the operating front, it posted EBIDTA margins of 19.1% V/s 17.6% in 4QFY2013, an expansion of 150bp. The Gross Margins came in flat at 47.6%. Thus the main reason for margin expansion is the 2.5% yoy dip in employee expenses, whereas other expenses rose by 18.8% yoy. The company had exceptional items to the extent of Rs.25.1cr and prior period adjustments to the extent of Rs.15.6cr, adjusted for which, the net profit came in at Rs.401cr for the quarter V/s Rs.311cr in 4QFY2013, posting a yoy growth of 29.1%.

Outlook and valuation: We expect UPL to post a CAGR of 13.5% and 23.2% in its sales and PAT respectively, over FY2014-16. At the current valuation of 6.5x FY2016E EPS, the stock is attractively valued. Hence, we maintain our Buy recommendation on the stock with a target price of Rs.353.