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LKP ‘Likes’

January 19, 2015 LKP Advisory

UPL Ltd. Buy, Target Rs.450 TECHNICAL VIEW


UPL daily price chart typifies a rounding bottom formation. Rounding bottom formations
United Phosphorus Ltd - UPL is the fifth largest generic crop protection company which last multi-years generally are a sign of turnaround stories for the stocks.
globally and the second fastest growing with large product registrations across
Levels of 210 had been acting as resistance for almost 7 years, right from 2007
multiple markets. onwards till 2014!!

Given its ability to grow earnings at a CAGR of 20 percent over the next 3 years with However, post the breakout in year 2014, the stock has risen sharply. The volumes on
sustainable EBIDTA margins of 20 percent at an ROE of more than 20 percent we the breakout was notably extremely high, thereby lending added confidence on the
breakout point. We believe that this current period of consolidation(shown as dotted
believe UPL should trade higher than 11x estimated one year forward earnings.
circle), syncs well with the longer term chart structure and once this consolidation gets
Although absence of product level granular details across multiple markets makes over, the upmove would most likely resume. We Recommend Buy a Target price of
Rs.450.
forecasting a challenge, the sheer size and valuation comfort makes UPL a
compelling story as it shall use free cash flows to retire debt and drive improvement
in capital efficiency. Recommend Buy.

BSE / NSE Code 512070 / UPL


Current Market Price (Rs.) 371
BSE Sensex / CNX Nifty 28,262 / 8,550
Market Cap (Rs crore) 16,429
52-Week Range (Rs) 388 / 177

Shareholding Pattern
Promoters (%) 29.80
FII Holding (%) 46.47
DII Holding (%) 8.62
Public & Others Holding (%) 15.11
Kunal Bothra S. Ranganathan
kunal@lkpsec.com s_ranganathan@lkpsec.com
91 22 6635 1213 91 22 6635 1270

Disclaimer:
The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true and is for general guidance only. While every effort is made to ensure the accuracy and completeness of
information contained, the company makes no guarantee and assumes no liability for any errors or omissions of the information. No one can use the information as the basis for any claim, demand or cause of action. LKP Securities Ltd., and affiliates, including the analyst
who have issued this report, may, on the date of this report, and from time to time, have long or short positions in, and buy or sell the securities of the companies mentioned herein or engage in any other transaction involving such securities and earn brokerage or
compensation or act as advisor or have other potential conflict of interest with respect to company/ies mentioned herein or inconsistent with any recommendation and related information and opinions. LKP Securities Ltd., and affiliates may seek to provide or have engaged
in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past.

LKP Securites Ltd, 13th Floor, Raheja Center, Free Press Road, Nariman Point, Mumbai-400 021. Email: lkpadvisory@lkpsec.com, Web: www.lkpsec.com