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Recommendations India

United Phosphorus 3QFY2014 performance highlights and results update

January 27, 2014, Monday, 05:34 GMT | 00:34 EST | 10:04 IST | 12:34 SGT
Contributed by Angel Broking


United Phosphorus (UPL) declared a robust set of numbers for 3QFY2014. For the quarter, the company posted sales of Rs.2,605cr, registering a yoy growth of 15.5%. The growth was aided by a 10% growth in volumes and a price appreciation of 2%, while the rest of the gains were on the back of a 3.0% rise in the exchange rate. On the operating front, the OPM came in at 16.2% vs 16.1% in the corresponding quarter of last year. However, in spite of lower expansion in the OPM, a lower rise in interest expenses, during the quarter, led to the PBT growing by 28.0% yoy. This, along with lower taxation during the quarter, led the company to post an almost 47.1% rise in the Adj. net profit during the quarter. We maintain our Buy on the stock with a price target of Rs.250.
 
Robust numbers: For the quarter, the company posted sales of Rs.2,605cr, registering a yoy growth of 15.5%. In terms of geographies, Europe (24%) and India (21%) were the key regions which posted robust growth. These were followed by Latin America which posted a growth of 18% yoy. On the operating front, the OPM for the quarter came in at 16.2% vs 16.1% in the corresponding quarter of last year. However, in spite of a lower expansion in the OPM, a muted rise in interest expenses led the PBT to grow by 28.0% yoy. This, along with a lower taxation, led the company to post a 47.1% rise in the Adj. net profit during the quarter.
 
Outlook and valuation: We expect UPL to post a CAGR of 12.0% and 15.0% in its sales and PAT respectively, over FY2013-15. At the current valuation of 9.1x FY2015E EPS, the stock is attractively valued. Hence, we maintain our Buy recommendation on the stock with a target price of Rs.250.

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