UPL slips on profit taking

UPL posted a 58% (YoY) jump in net profit for Q1FY21 at Rs.682 crore despite a 1% drop in revenue at Rs.7833 crore. A 8% drop in costs, a 3.5% drop in fixed overheads and a lower base effect helped the bottomline, which was impacted due to the exceptional loss related to acquisition of Arysta.

The growth was led by increased revenue from India and SE Asia while North America and Latin America showed a dip. Brazilian Real devaluation led to postponement of orders from Q1 to later quarters.

The company did well in India with an over 15% increase in growth wherein branded business grew 36%  with strong performance in Insecticides and Herbicides. Despite the impact of the coronavirus in the region, India had record collections in Q1.

UPL’s net debt as at 30th June stood at Rs.22,000 crore and finance cost during the current Q1 was at Rs.551 crore v/s Rs.398 crore (YoY).

The stock price is tumultuous. It opened 1% higher at Rs.482.50 and even went up to Rs.484 levels but from there, it slipped down to Rs.445.55 and is currently the top loser on the BSE. This is profit booking by punters post the results though major brokerage houses maintained their bullish stance.