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Recommendations India

United Phosphorus 1QFY2015 performance highlights and results update

August 1, 2014, Friday, 10:59 GMT | 05:59 EST | 14:29 IST | 16:59 SGT
Contributed by Angel Broking


United Phosphorus (UPL) announced a good set of numbers for 1QFY2015. For the quarter, the company posted sales of Rs.2,720cr, V/s Rs.2,410cr in 1QFY2014, posting a yoy growth of 12.9%. On the operating front, the OPM came in at 17.9% V/s 17.0% in 1QFY2014, an expansion of 90bp yoy. The OPM growth was aided, to an extent, by the GPM; which expanded to 51.5% V/s 49.1% in 1QFY2014. Thus, the Adj PAT came in at Rs.263cr (V/s an expected Rs.213cr), registering a yoy growth of 23.6%. During the quarter, the company posted extraordinary gains of Rs.35.8cr from sale of stake in its Brazilian subsidiary - Sipcam UPL. We maintain our Buy recommendation on the stock with a price target of Rs.424.

Robust numbers: United Phosphorus announced a good set of numbers for 1QFY2015. For the quarter, the company posted sales of Rs.2,720cr V/s Rs.2,410cr in 1QFY2014, posting a yoy growth of 12.9%. The growth was driven by the India business, which grew by 23% yoy, while USA grew by 19% yoy. The rest of the markets grew modestly. However, most of the rise was accounted by the price and exchange impact, which was of 6% and 4% respectively, while volume rose by 3% yoy. On the operating front, the OPM for the quarter came in at 17.9% V/s 17.0% in 1QFY2014, an expansion of 90bp yoy. The OPM growth was aided, to an extent, by the GPM; which expanded to 51.5% V/s 49.1% in 1QFY2014. Thus, the Adj PAT came in at Rs.263cr (V/s an expected Rs.213cr), registering a yoy growth of 23.6%. During the quarter the company, posted extraordinary gains of Rs.35.8cr from sale of stake in its Brazilian subsidiary - Sipcam UPL.

Outlook and valuation: We expect UPL to post a CAGR of 13.5% and 23.2% in its sales and PAT respectively, over FY2014-16E. At the current valuation of 9.2x FY2016E EPS, the stock is attractively valued. Hence, we maintain our Buy recommendation on the stock with a target price of Rs.424.

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