UPL Q3 Results: Profit Rises 13%; Maintains Growth Guidance For FY21

UPL Ltd. maintained its revenue and operating income growth guidance for the ongoing financial year on hopes of favourable agronomic conditions and strong agricultural commodity prices.

The agrochemical maker saw its revenue rise 3% over the year earlier to Rs 9,126 crore in the quarter ended December, according to an exchange filing. That compares with the Rs 9,713.5-crore consensus estimate of analysts tracked by Bloomberg.

UPL maintained its guidance of 6-8% growth in revenue and 10-12% in Ebitda for the financial year ending March 2021.

Other highlights (year-on-year)

• Net profit increased 13% to Rs 794 crore, against the projected Rs 895.8 crore. The bottom line was also aided by a threefold jump in the company’s other income to Rs 67 crore in the reported period.

• Operating profit, or earnings before interest, tax, depreciation and amortisation, rose 5% to Rs 2,202 crore, compared with the Rs 2,296.6-crore estimate.

• Ebitda margin expanded to 24.1% from 23.6%, aided by cost synergies and cost-optimisation measures taken during the quarter.

UPL’s revenue performance across geographies (year-on-year)

• Latin America revenue fell 8% to Rs 3,849 crore amid season delays due to drought in Brazil and Argentina, pushing sales to Q4. “Increase in grain commodity prices and recent rains support a positive trend for Q4,” the company said.

• North America business grew 5% to Rs 1,352 crore, driven by market share gains. The company expects demand for Glufosinate to increase.

• Revenue for the European business rose 30% to Rs 1,120 crore, driven by improved mix, strong sales of differentiated and sustainable solutions and moderate post-patent growth.

• The company’s India business grew 21% to Rs 906 crore despite a market slowdown during the quarter. “Excess rains in the south reduced market growth after a very strong H1 FY21.”

• The rest of world business grew 6% to Rs 1,899 crore with a double-digit growth in Africa, Australia and New Zealand.

UPL also reported an exceptional loss of Rs 78 crore in the quarter ended December for costs related to restructuring in Europe and provision written back related to litigation costs in North America. The base quarter had an exceptional gain of Rs 75 crore.

UPL was the second-worst performer on the Nifty 50 during the October-December period. The stock fell 7.3% compared with a 24.3% gain in the benchmark. Most of the decline in shares came after ET Prime reported a whistleblower complaint alleging wrongdoing in rent deals. UPL, however, had clarified that there was no new complaint against it. “The complainant was duly informed of the findings of the audit committee and the matter was closed,” the company had said in a December filing.

Shares of UPL ended 0.94% lower before the results were anounced, compared with a 1.3% drop in the benchmark Nifty 50 Index.