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United Phosphorus 2QFY2013 performance highlights and results update

Contributed by Angel Broking

For 2QFY2013, United Phosphorus's (UPL) revenue grew by 4.7% yoy to ?1,802cr and net PAT grew by 76.0% to Rs.120cr. Th e management has maintained its positive revenue guidance of 15% for FY2013 and OPM guidance at 18-20%. In spite of factoring in conservative numbers, the stock is quoting at an attractive valuation of 7.0x FY2014E EPS; hence, we maintain our Buy rating on the stock.

Robust net profit growth: UPL reported consolidated revenues of ?2,180cr, registering a growth of 4.7% yoy. Volumes contracted 2%, the price increased by 5% while the balance 2% was contributed by a favorable impact of exchange. On the operating front, the company reported a flat EBITDA margin at 15.1%, (14.8% in 2QFY2012). However, on account of a 57.2% yoy dip in the interest expenditure, the net profits came in at Rs1 20cr, registering a growth of 76.0%.

Outlook and valuation: We expect UPL to post a CAGR of 10.0% and 18.4% in its sales and PAT over FY2012-14, respectively. At the current valuation of 7.0x FY2014E EPS, the stock is attractively valu ed. Hence, we maintain our Buy recommendation on the stock with a revised target price of Rs.170.