Recommendations » India

United Phosphorus 3QFY2013 performance highlights and results update

Contributed by Angel Broking

For 3QFY2013, United Phosphorus (UPL)’ revenue grew by 20.5% yoy to Rs.2,255cr and net PAT grew by 53.1% to Rs.173cr. The Management has maintained its positive revenue growth guidance of 15% and OPM (incl. other income) growth guidance of 19-20% for FY2013. For FY2014, also the company expects to post a high double digit growth. Even after factoring in conservative numbers, the stock is quoting at an attractive valuation of 8.0x FY2014E EPS and hence, we maintain our Buy rating on the stock.

Robust Net Profit growth: The company has reported a top-line of Rs.2,255cr, a growth of 20.5% yoy. The sales growth during the quarter was led by the international markets, which grew by 23% yoy, while the domestic markets grew by 5% yoy during the period. Overall, the volumes during the quarter rose by 15% yoy, while price variance and exchange contributed around 2% and 4% respectively. On the operating front, the company reported an EBITDA margin expansion of 61bp to 16.1% (15.5% in 3QFY2012). This along with the lower taxation and income from associates, aided a 53.1% yoy growth in net profit to Rs.173cr.

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 current valuations of 8.0x FY2014E EPS the stock is attractively valued. Hence, we maintain our Buy recommendation on the stock with a revised target price of Rs.170.