UPL Ltd. experienced a downturn in its share price during Monday’s trading session after Jefferies revised its earnings projections for the company. This adjustment came after UPL fell short of Jefferies’ expectations for its fourth-quarter earnings. The brokerage highlighted that a substantial one-off loss of $2.75 billion significantly impacted UPL’s net profit.
Earnings Estimates Adjusted
Jefferies made minor cuts of 1-3% to its earnings per share (EPS) estimates for the financial years FY26 and FY27 due to the Q4 performance. Additionally, the brokerage updated UPL’s sales and EBITDA growth forecasts, predicting growth rates of 7% and 19%, respectively, for the current financial year. Notably, despite the recent decline, UPL’s stock is trading at 13 times FY26 price-to-earnings, which is still 8% lower than its historical average.
Impressive Year-on-Year Growth
On a more positive note, UPL reported an astounding 2,140% year-on-year increase in net profit for the fourth quarter. According to Jefferies, this remarkable growth can be attributed to improved operational profitability, driven by factors such as volume growth, a better product mix, and the normalization of rebates.
Key Highlights from UPL’s Q4 Earnings
- Revenue Growth: Increased by 10.6%, reaching Rs 15,573 crore, up from Rs 14,078 crore.
- EBITDA Surge: Rose by 67.5% to Rs 3,237 crore compared to Rs 1,932 crore.
- Margin Expansion: Improved to 20.8% from 13.7%.
- Net Profit: Jumped to Rs 896 crore, up from just Rs 40 crore.
- Dividend Announcement: The board declared a Rs 6 per share dividend.
Jefferies expressed optimism about UPL’s performance in FY25, noting a 47% increase in EBITDA and a 13% rise in volume growth, alongside a significant $1.1 billion reduction in debt during the past financial year.
Future Outlook and Target Price Adjustment
Looking ahead, Jefferies anticipates a recovery beginning in the second half of FY26. The firm maintained a "Buy" rating on UPL and increased the target price to Rs 810, up from Rs 710, suggesting a potential upside of 19.76% from Monday’s closing price.
On the trading front, UPL’s stock fell 4.93% to Rs 643.50 per share, with a further decline of 4.29% to Rs 647.80 noted at 10:19 a.m. This contrasts with a 0.66% decrease in the NSE Nifty 50 index. Over the past year, UPL’s stock has risen by 21.55%, and it has gained 29.46% year-to-date. The day’s trading volume reached 5.1 times its 30-day average, with the relative strength index at 45.61.
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