UPL dips 12% in three days post Q2 results; inventory hits over four-month low

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Shares of UPL continued to business under pressure, hitting an over four-month low of Rs 399 after slipping 4 per cent on the BSE on Wednesday. The inventory of the agrochemicals company used to be trading at its lowest level since June 15, 2020, when it touched a low of Rs 398 in intra-day business.


Up to now three days, the inventory slipped 12 per cent after the company reported a lower-than-expected operational and profit performance in September quarter (Q2FY21). Ebitda (earnings before interest, taxes, depreciation, and amortisation) margins improved 50 basis points to 20 per cent. Gross margin contracted to 40 per cent from 42 per cent, because of change in the product/ geography mix, price decline and exchange have an effect on.


Revenues were up 14 per cent higher year-on-year (YoY), driven by Latin The us/ India/ RoW markets while Europe/North The us markets grew in unmarried digit. Profit after tax of the company grew 47 per cent YoY all the way through the quarter, chiefly because of increase in other income, lower interest cost and lower tax rate.


On the other hand, the management maintains revenue guidance of 6-8 per cent and 10-12 per cent in Ebitda. The growth will be driven by a focus on differentiated solutions in addition to new product launches. Price increases in native currencies and cost savings will reinforce margins, it said.


Debt remains a key concern as net debt increased by Rs 178 crore as opposed to March 2020. Overall, balance sheet of the company has not shown remarkable improvement and cash waft from operations used to be also under pressure because of higher stock, Motilal Oswal Securities said in result update.


Analysts at Emkay Global Financial Products and services do not anticipate any meaningful change in receivable days apart from whether UPL goes for higher factoring. The brokerage firm imagine that the improvement in payables would be offset by reasonably higher stock levels going ahead as its Mar-20 stock used to be lower because of provide disruption.

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