UPL Q2 Results Review - Pricing Pressure Continues To Hurt Operating Performance: Motilal Oswal

Motilal Oswal Report

UPL Ltd. reported a muted quarter as Ebitda remained flat on a YoY basis, largely due to a price decline (down 7% YoY) led by overcapacity in China. Volume grew 16% (indicating a healthy demand environment), resulting in revenue growth of 9% YoY.

UPL is expecting improvement in the global business, with inventory destocking nearing completion. Further, margins are expected to witness a significant uptick in H2, led by the benefit of lower-cost inventory, increase in high-margin product sales, favorable regional mix, and margin expansion in the Indian business.

We largely retain our FY25E/ FY26E EPS on the back of positive commentary on the outlook (expected margin recovery and mid-single digit volume growth in H2 FY25) and unchanged guidance. Reiterate Neutral with a target price of Rs 550.

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