Q1FY24 Preview: UPL: Revenue seen at Rs. 96,495 million, PAT at Rs. 2,659 million

29 Jul 2023 , 04:27 PM

Result date: 31^st July, 2023

Recommendation: Add

Target price: Rs. 740

Analysts at IIFL Capital Services expect a weak quarter for UPL, with ~11% revenue decline over the year-ago quarter, driven by steep price corrections in generic portfolio. Stressed market environment in North America, Europe, Brazil and India owing to elevated inventory, will impact overall performance. However, RoW region, Asia (ex-India) and LatAm (ex-Brazil) are likely to deliver relatively better performance.

UPL’s gross margins could contract 300 basis points over the year-ago quarter. Though logistics costs have moderated, steep corrections in product prices along with other costs remaining largely intact, EBITDA margin could see contraction of 580 basis points over the year-ago quarter.

Analysts at IIFL Capital Services expect finance cost (excluding f/x impact) to remain elevated on the back of higher interest rates. However, impact of currency translation on UPL’s borrowings and working capital, given the company’s cross-currency hedges needs to be seen and have not been accounted for in their estimates.

UPL’s Profit After Tax or PAT could decline 72.2% over the year-ago quarter.

Rs. Million	June 2023 estimates	YoY change	QoQ change
Revenue	96,495	(10.8)%	(41.8)%
EBITDA	15,296	(34.7)%	(49.3)%
EBITDA margin (%)	15.9%	(580) bps	(234) bps
Profit After Tax	2,659	(72.2)%	(67.6)%

Source: IIFL Research