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Please refer to important disclosures at the end of this report

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Y/E March (` cr) 4QFY2014 3QFY2014 % chg (qoq) 4QFY2013 % chg (yoy)
Net sales 3,296 2605 26.6 2773 18.9
Other income 69 92 (25.3) 66 3.7
Gross profit 1570 1280 22.6 1322 18.8
Operating profit 630 423 48.9 489 28.8
Adj. net profit 401 255 57.2 311 29.1
Source: Company, Angel Research
United Phosphorous (UPL) posted a robust set of numbers for 4QFY2014. The
company posted net sales of `3,296cr V/s `2,773cr in 4QFY2013, posting a yoy
growth of 18.9%. On the operating front, it posted an EBIDTA margin of 19.1% V/s
17.6% in 4QFY2013, an expansion of 150bp. The Gross Margins came in flat at
47.6%. Thus the main reason for the margin expansion is a 2.5% yoy dip in
employee expenses, whereas the other expenses rose by 18.8% yoy. During the
quarter, the company had exceptional items to the extent of `25.1cr and prior
period adjustments to the extent of `15.6cr, adjusted for which, the net profit came
in at `401cr V/s `311cr in 4QFY2013, posting a yoy growth of 29.1%. For
FY2015, the Management has guided for a 12-15% sales growth yoy, with margin
expected to expand by 60-100bp. We maintain our Buy recommendation with a
price target of `353.
Robust numbers: UPL posted a robust set of numbers for 4QFY2014. The company
posted net sales of `3,296cr V/s `2,773cr in 4QFY2013, posting a yoy growth of
18.9%. On the operating front, it posted EBIDTA margins of 19.1% V/s 17.6% in
4QFY2013, an expansion of 150bp. The Gross Margins came in flat at 47.6%.
Thus the main reason for margin expansion is the 2.5% yoy dip in employee
expenses, whereas other expenses rose by 18.8% yoy. The company had
exceptional items to the extent of `25.1cr and prior period adjustments to the
extent of `15.6cr, adjusted for which, the net profit came in at `401cr for the
quarter V/s `311cr in 4QFY2013, posting a yoy growth of 29.1%.
Outlook and valuation: We expect UPL to post a CAGR of 13.5% and 23.2% in its
sales and PAT respectively, over FY2014-16. At the current valuation of 6.5x
FY2016E EPS, the stock is attractively valued. Hence, we maintain our Buy
recommendation on the stock with a target price of `353.
Key financials (Consolidated)
Y/E March (` cr) FY2013 FY2014 FY2015E FY2016E
Total revenue 9,010 10,580 11,850 13,627
% chg 19.6 17.4 12.0 15.0
Adj. profit 754 998 1,282 1,515
% chg 34.3 32.4 28.5 18.1
EBITDA (%) 16.0 17.3 17.3 17.3
EPS (`) 17.0 23.3 29.9 35.3
P/E (x) 13.5 9.9 7.7 6.5
P/BV (x) 2.2 1.9 1.6 1.3
RoE (%) 17.1 20.2 22.2 21.7
RoCE (%) 14.4 17.7 19.6 20.1
EV/Sales (x) 0.9 0.8 0.7 0.5
EV/EBITDA (x) 5.9 4.4 3.9 3.0
Source: Company, Angel Research; Note: CMP as of April 25, 2014
BUY
CMP `230
Target Price `353
Investment Period 12 Months

Stock Info
Sector
1,113
Bloomberg Code
Shareholding Pattern (%)
Promoters 29.8
MF / Banks / Indian Fls 13.7
FII / NRIs / OCBs 48.3
Indian Public / Others 8.2
Abs. (%) 3m 1yr 3yr
Sensex 12.7 74.3 42.3
UPL 32.1 54.2 31.8
UNTP@IN
Face Value (`)
BSE Sensex
Nifty
Reuters Code
2
22,688
6,783
UNPO.BO
Agrichemical
Avg. Daily Volume
Market Cap (` cr)
Beta
52 Week High / Low
10,198
0.7
233/121
217719
Net Debt (` cr)











Sarabjit Kour Nangra
+91-22-3935 7800 ext. 6806
sarabjit@angelbroking.com

United Phosphorus
Performance Highlights
4QFY2014 Result Update | Agrichemical
April 28, 2014



United Phosphorus | 4QFY2014 Result Update
April 28, 2014

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Exhibit 1: 4QFY2014 Performance (Consolidated)
Y/E March (` cr) 4QFY2014 3QFY2014 % chg (qoq) 4QFY2013 % chg (yoy) FY2014 FY2013 % chg
Net sales 3,296 2,605 26.6 2,773 18.9 10,580 9,010 17.4
Other income 69 92 (25.3) 66 3.7 322 283 13.8
Total income 3,365 2,697 24.8 2,839 18.5 10,902 9,293 17.3
Gross profit 1570 1280 22.6 1322 18.8 5139 4323 18.9
Gross margin (%) 47.6 49.2

47.7

48.6 48.0

Operating profit 630 423 48.9 489 28.8 1829 1479 23.6
Operating margin (%) 19.1 16.2

17.6

17.3 16.4

Financial cost 120 110 9.6 130 (7.7) 487 429

Depreciation 119 104 14.5 102 17.1 407 354 15.1
PBT 459 301 52.4 323 42.0 1257 979 28.3
Provision for taxation 44 52 (16.4) 19 129.3 222 203 9.1
PAT Before Exc. And MI 416 249 66.9 304 36.5 1035 776 33.4
Minority (16) 1

(6)

(7) 2

Income from Associate 10 11

21

30 38

Extra ordinary Income/( Exp.) 50 40

41

109 41

Reported PAT 360 222 62.1 278 29.5 949 775 22.5
Adjusted PAT 401 255 57.2 311 29.1 1039 807 28.7
EPS (`) 9.4 5.8 7.0 24.2 18.2
Source: Company, Angel Research
Double digit top-line growth; mainly driven by India, ROW and
USA
For the quarter, the company posted sales of `3,296cr, registering a yoy growth of
18.9%.
The growth was aided by volume growth of 6% and price appreciation of 5%,
while the rest of the gains were on back of an 8% rise in the exchange rate.
In terms of geographies, the key regions which posted robust growth were India,
ROW, and USA which posted gains of 31%, 27% and 27% respectively. Although
Europe witnessed an impact on sales on back of delayed winter, it still posted
robust growth during the quarter of 18% yoy. Latin America on the other hand
posted a flat growth during the quarter.




United Phosphorus | 4QFY2014 Result Update
April 28, 2014

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Exhibit 2: Sales performance
2,773
2,410
2,269
2,605
3,296
0
300
600
900
1,200
1,500
1,800
2,100
2,400
2,700
3,000
3,300
4QFY2013 1QFY2014 2QFY2014 3QFY2014 4QFY2014
(
`
c
r
)

Source: Company, Angel Research
Exhibit 3: Growth break-up
8
5
6
0
1
2
3
4
5
6
7
8
9
Exchange impact Realisation Volume
(
%
)

Source: Company, Angel Research

Exhibit 4: Volume and realisation break-up (yoy)
4
2
1
2
5
16
7
12
10
6
0
5
10
15
20
25
30
35
40
4QFY2013 1QFY2014 2QFY2014 3QFY2014 4QFY2014
(
%
)
Realisation Volume
Source: Company, Angel Research
EBITDA margin improves yoy
During 4QFY2014, UPL posted an EBIDTA margin of 19.1% V/s 17.6% in
4QFY2013, an expansion of 150bp. The Gross Margins came in flat at 47.6%.
Thus the main reason for margin expansion is a 2.5% yoy dip in employee
expenses; other expenses rose 18.8% yoy.



United Phosphorus | 4QFY2014 Result Update
April 28, 2014

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Exhibit 5: EBITDA margin trend
17.6
17.0
16.0
16.2
19.1
15.0
16.0
17.0
18.0
19.0
20.0
4QFY2013 1QFY2014 2QFY2014 3QFY2014 4QFY2014
(
%
)

Source: Company, Angel Research
Adj net profit grew 29.1% yoy
The company during the quarter, had exceptional items to the extent of `25.1cr
and prior period adjustments to the extent of `15.6cr, adjusted for which the net
profit came in at `401cr V/s `311cr in 4QFY2014, posting a yoy growth of 29.1%.
Exhibit 6: Adjusted PAT trend
311
213
170
255
401
0
10
20
30
40
50
60
0
50
100
150
200
250
300
350
400
450
4QFY2013 1QFY2014 2QFY2014 3QFY2014 4QFY2014
(
%
)
(
`
c
r
)
Adj PAT % YoY

Source: Company, Angel Research









United Phosphorus | 4QFY2014 Result Update
April 28, 2014

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Investment arguments
Innovators dominant in the off-patent space; Generic firms in
a sweet spot
The global agrichem industry, valued at US$40bn (CY2008), is dominated by the
top six innovators, viz Bayer, Syngenta, Monsanto, BASF, DuPont and Dow, which
enjoy a large market share of the patented (28%) and off-patent (32%) market.
The top six innovators enjoy a large share of the off-patent market due to high
entry barriers for pure generic players. Thus, one-third of the total pie worth
US$13bn, which is controlled by the top six innovators through proprietary off-
patent products, provides a high-growth opportunity for larger integrated generic
players such as UPL.
Generic segment’s market share to increase
Generic players have been garnering a high market share, increasing from 32%
levels in 1998 to 40% by 2006-end. The industry registered a CAGR of 3% over
1998-2006, while generic players outpaced the industry with a CAGR of 6%.
Going ahead, given the opportunities and a drop in the rate of new molecule
introduction by innovators, we expect generic players to continue to outpace the
industry’s growth and increase their market share in the overall pie. Historically,
global agrichem players have been logging in-line growth with global GDP. Going
ahead, over CY2013-14, the global economy is expected to grow by 3-4%.
Assuming this trend plays out in terms of growth for the agrichem industry and the
same rate of genericisation occurs, the agrichemical generic industry could log in
6-8% yoy growth during the period and garner a market share of 44-45%.
A global generic play
UPL figures among the top five global generic agrichemical players with presence
across major markets including the US, EU, Latin America and India. Given the
high entry barriers by way of high investments, entry of new players is restricted.
Thus, amidst this scenario and on account of having a low-cost base,
we believe UPL enjoys an edge over competition and is placed in a sweet spot to
leverage the upcoming opportunities in the global generic space.





United Phosphorus | 4QFY2014 Result Update
April 28, 2014

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Outlook and valuation
Over the last few years, the global agriculture sector has been
rejuvenating/reviving on the back of rising food prices. Food security is also a top
priority for most governments; reducing food loss is one of the easiest ways to
boost food inventory. Hence, we believe agrichemical companies would continue
to do well in the wake of heightened food security risks, and strong demand is
likely to be witnessed across the world. Overall, we expect the global agrichemical
industry to perform well from here on. However, generics are expected to register
a healthy growth due to a) increasing penetration and wresting market share from
innovators and b) patent expiries worth US$3bn–4bn during 2009-14.
We estimate UPL to post a 13.5% and 19.4% CAGR in sales and PAT, respectively,
over FY2014-16. The stock is trading at an attractive valuation of 6.5x FY2016E
EPS. Hence, we maintain our Buy recommendation on the stock with a target price
of `353.
Exhibit 7: Key assumption
FY2015E FY2016E
Sales growth 12.0 15.0
EBITDA margin 17.3 17.3
Tax rate 20.0 20.0
Source: Company, Angel Research

Exhibit 8: P/E band
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100
150
200
250
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a
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1
4
A
p
r
-
1
4
(
`
)
Price 6x 8x 10x 14x

Source: Company, Angel Research

Exhibit 9: Peer valuation
Company Reco Mcap CMP TP Upside P/E (x) EV/Sales (x) EV/EBITDA (x) RoE (%) CAGR (%)

(` cr) (`) (`) (%) FY15E FY16E FY15E FY16E FY15E FY16E FY15E FY16E Sales PAT
Rallis Neutral 3,590 185 - - 20.4 17.6 1.8 1.5 12.8 10.7 22.6 22.4 16.4 16.0
United Phosphorus Buy 10,197 230 353 53.5 7.7 6.5 0.7 0.5 3.9 3.0 22.2 21.7 13.5 23.2
Source: Company, Angel Research, Bloomberg



United Phosphorus | 4QFY2014 Result Update
April 28, 2014

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Company background
United Phosphorus (UPL) is a global generic crop protection, chemicals and seeds
company. The company is fully backward and forward integrated by taking
advantage of the consolidation opportunities within the agrochemical industry. UPL
is the largest Indian agrochemical company and had revenue of about `10,580cr
for year ended March 2014.
Profit & Loss Statement (Consolidated)
Y/E March (` cr) FY2011 FY2012 FY2013 FY2014 FY2015E FY2016E
Net Sales 5,650 7,534 9,010 10,580 11,850 13,627
Other operating income 111 137 184 191 191 191
Total operating income 5,761 7,671 9,195 10,771 12,040 13,818
% chg 8.9 33.2 19.9 17.1 11.8 14.8
Total Expenditure 4,708 6,328 7,568 8,751 9,796 11,265
Net Raw Materials 2,902 4,058 4,687 5,441 6,094 7,008
Other Mfg costs 514 590 741 828 1,138 1,308
Personnel 515 686 853 946 1,060 1,219
Other 778 994 1,287 1,535 1,505 1,731
EBITDA 942 1,206 1,442 1,829 2,053 2,361
% chg 17.1 28.1 19.6 26.8 12.3 15.0
(% of Net Sales) 16.7 16.0 16.0 17.3 17.3 17.3
Depreciation& Amortisation 214 292 354 407 433 454
EBIT 839 1,051 1,273 1,613 1,811 2,098
% chg 42.3 25.3 21.1 26.7 12.3 15.8
(% of Net Sales) 14.6 13.7 13.8 15.0 15.0 15.2
Interest & other Charges 312 415 429 487 373 373
Other Income 131 97 73 131 131 131
(% of PBT) 20 13 8 10 8 7
Recurring PBT 658 734 917 1,257 1,569 1,856
% chg 7.2 11.4 25.0 37.1 24.8 18.3
Extraordinary Expense/(Inc.) 6 (5) 27 85 - -
PBT (reported) 664 729 944 1,172 1,569 1,856
Tax 73 128 203 222 314 371
(% of PBT) 11.0 17.6 21.5 18.9 20.0 20.0
PAT (reported) 591 601 741 950 1,255 1,485
Add: Share of earnings of asso. (23) (40) 32 30 34 38
Less: Minority interest (MI) 10 5 (2) 7 7 7
Prior period items - - - 24 - 1
PAT after MI (reported) 558 556 775 950 1,282 1,515
ADJ. PAT 552 561 754 998 1,282 1,515
% chg 1.7 1.6 34.3 32.4 28.5 18.1
(% of Net Sales) 9.8 7.5 8.4 9.4 10.8 11.1
Basic EPS (`) 12.0 12.2 17.0 23.3 29.9 35.3
Fully Diluted EPS (`) 12.0 12.2 17.0 23.3 29.9 35.3
% chg (3.2) 1.6 40.1 36.7 28.5 18.1





United Phosphorus | 4QFY2014 Result Update
April 28, 2014

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Balance Sheet (Consolidated)
Y/E March (` cr) FY2011 FY2012 FY2013 FY2014 FY2015E FY2016E
SOURCES OF FUNDS
Equity Share Capital 92 92 89 86 86 86
Preference Capital - - - - - -
Reserves& Surplus 3,634 4,081 4,557 5,162 6,243 7,557
Shareholders’ Funds 3,726 4,173 4,645 5,247 6,329 7,643
Minority Interest 18 250 234 172 179 186
Total Loans 2,679 3,389 4,203 2,873 2,873 2,873
Other Long term liabilities 42 301 395 311 311 311
Long Term Provisions 31 51 51 53 53 53
Deferred Tax Liability (8) (6) (13) 57 57 57
Total Liabilities 6,488 8,158 9,516 8,714 9,802 11,123
APPLICATION OF FUNDS
Gross Block 3,947 4,687 5,386 6,039 6,339 6,639
Less: Acc. Depreciation 2,174 2,605 3,173 3,580 4,014 4,468
Net Block 1,773 2,082 2,213 2,459 2,325 2,171
Capital Work-in-Progress 57 306 378 378 378 378
Goodwill / Intangilbles 548 1,141 1,277 1,212 1,212 1,212
Investments 823 795 1,025 737 737 737
Long Term Loan & Adv. 220 321 277 389 365 419
Current Assets 4,777 5,625 7,154 7,572 8,477 10,451
Cash 700 1,566 1,548 1,023 1,105 1,973
Loans & Advances 326 602 852 771 1,120 1,288
Other 3,751 3,458 4,754 5,779 6,252 7,189
Current liabilities 1,709 2,111 2,807 4,033 3,692 4,246
Net Current Assets 3,068 3,514 4,346 3,539 4,785 6,205
Others - - - - - -
Total Assets 6,488 8,158 9,516 8,714 9,802 11,123






United Phosphorus | 4QFY2014 Result Update
April 28, 2014

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Cash Flow Statement (Consolidated)
Y/E March (` cr) FY2011 FY2012 FY2013 FY2014 FY2015E FY2016E
Profit before tax 664 729 944 1,172 1,569 1,856
Depreciation 214 292 354 407 433 454
Change in Working Capital (1,251) 318 (806) 171 (1,140) (607)
Less: Other income - - - - - -
Direct taxes paid (73) (128) (203) (222) (314) (371)
Cash Flow from Operations (446) 1,211 288 1,528 549 1,332
(Inc.)/ Dec. in Fixed Assets (753) (989) (771) (653) (300) (300)
(Inc.)/ Dec. in Investments (62) 29 (231) - - -
Inc./ (Dec.) in loans and adv. - - - - - -
Other income - - - - - -
Cash Flow from Investing (815) (961) (1,002) (653) (300) (300)
Issue of Equity 312 - - (3) - -
Inc./(Dec.) in loans (333) (989) (908) 1,413 (0) (0)
Dividend Paid (Incl. Tax) (108) (134) (129) (201) (201) (201)
Others (455) 1,738 1,733 (2,612) 34 36
Cash Flow from Financing (583) 615 696 (1,403) (167) (164)
Inc./(Dec.) in Cash (878) 866 (18) (525) 82 868
Opening Cash balances 1,578 700 1,566 1,548 1,023 1,105
Closing Cash balances 700 1,566 1,548 1,023 1,105 1,973






United Phosphorus | 4QFY2014 Result Update
April 28, 2014

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Key Ratios
Y/E March FY2011 FY2012 FY2013 FY2014 FY2015E FY2016E
Valuation Ratio (x)
P/E (on FDEPS) 19.2 18.9 13.5 9.9 7.7 6.5
P/CEPS 13.9 12.4 9.2 7.0 5.7 5.0
P/BV 2.9 2.5 2.2 1.9 1.6 1.3
Dividend yield (%) 0.9 1.1 1.1 1.1 1.1 1.1
EV/Sales 1.4 1.1 0.9 0.8 0.7 0.5
EV/EBITDA 8.6 6.6 5.9 4.4 3.9 3.0
EV / Total Assets 1.2 1.0 0.9 0.9 0.8 0.6
Per Share Data (`)
EPS (Basic) 12.0 12.2 17.0 23.3 29.9 35.3
EPS (fully diluted) 12.0 12.2 17.0 23.3 29.9 35.3
Cash EPS 16.6 18.5 25.0 32.8 40.0 45.9
DPS 2.0 2.5 2.5 2.5 2.5 2.5
Book Value 80.7 90.4 105.0 122.4 147.7 178.3
DuPont Analysis
EBIT margin 14.6 13.7 13.8 15.0 15.0 15.2
Tax retention ratio 89.0 82.4 78.5 81.1 80.0 80.0
Asset turnover (x) 1.4 1.4 1.4 1.5 1.6 1.7
ROIC (Post-tax) 18.2 15.8 15.4 18.5 19.1 20.2
Cost of Debt (Post Tax) 10.9 11.3 8.9 11.2 10.4 10.4
Leverage (x) 0.4 0.5 0.5 0.5 0.3 0.2
Operating ROE 21.1 18.0 18.6 21.9 21.9 22.2
Returns (%)
ROCE (Pre-tax) 14.1 14.4 14.4 17.7 19.6 20.1
Angel ROIC (Pre-tax) 20.8 19.5 20.0 23.2 24.3 25.6
ROE 16.4 14.2 17.1 20.2 22.2 21.7
Turnover ratios (x)
Asset Turnover (Gross Block) 1.6 1.8 1.8 1.9 1.9 2.1
Inventory / Sales (days) 76 78 78 83 85 84
Receivables (days) 87 93 102 83 85 84
Payables (days) 102 102 108 69 71 70
WCcycle (ex-cash) (days) 118 105 96 92 95 106
Solvency ratios (x)
Net debt to equity 0.3 0.5 0.4 0.6 0.4 0.3
Net debt to EBITDA 1.0 2.1 1.5 1.8 1.0 0.9
Interest Coverage (EBIT / Int.) 2.7 2.5 3.0 3.3 4.8 5.6





United Phosphorus | 4QFY2014 Result Update
April 28, 2014

11




Research Team Tel: 022 - 39357800 E-mail: research@angelbroking.com Website: www.angelbroking.com

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Disclosure of Interest Statement UPL
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies' Directors ownership of the stock No
4. Broking relationship with company covered No

Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
Reduce (-5% to -15%) Sell (< -15%)

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors