Ticker : UPL / 512070

ISIN: INE628A01036

Industry analysis: Agriculture plays one of the key roles in India’s GDP. More than 55% Rural population. Agriculture products made part of 4th largest exported principal commodity with a 10% share. (from here ) It is more than the US $ 260 Billion industry with all its allied Sector like Chemical, Tractor, and others. As with any other significant size sector, agriculture is also growing at a slow speed. CAGR 3.3% in last 5 Years.

India is known for its spices and related products. However, the production of Fruit makes us the second-largest producer.

As the industry is enormous and the majority population depends upon it, there is a big market for Agrochemicals.

Globally the demand for food production is ever-increasing to feed the increasing population. Due to many reasons, the land under agriculture is reducing, so the need for higher productivity is also growing. So it is essential to protect crops for increased yield from agricultural land. There are many hurdles in the path, and the Farmer needs to use a different type of chemical. Interestingly India is among the lowest usage of crop protection per hectare. Lower than 2% global usage when Global Crop protection Chemical Market is expected to reach US$ 69000 million in 2019 with a CAGR of 5.5%. So needless to say, there is a big market waiting for the companies Which are the perfect place.

UPL is one of them.

Company analysis: The Company is a leader in the sector with a 17% CAGR in the last five years, making it Globally one of the fastest-growing. The Company has a presence in 122 counties with 15 production units in India and 13 abroad. They are operating through 76 Global subsidiaries. Latin American countries are the biggest market for Company. The Company has diversified products from all over the world, making them one of the extensive portfolio bases with reduced Risk. But still, the Company is under penetration. Over the year, the Company achieved vertical Diversification and operated in industrial chemical production. Around 16% revenue.

Above everything else, a big plus is the high barrier of entry in the sector. And still cost per unit of production is very low. But as the problem with Subsidy on Fertiliser, public Sector companies are not looking very attractive. Switch cost is high when farmers generally don’t change, and when they change, they need expert advice which is not easy and cost-effective in many parts of India.

All the aspects above mentioned Make it a Good buy.

The Company declared the Merger of Advanta. Group company. Synergy and expecting to have ₹90 Cr per year. It also increases the product portfolio and gives access to the Agriculture value Sector to UPL. To the date, CCI, NSE, BSE, and Gujarat high court. 

SHAREHOLDING PATTERN BSE Data

 

Financial Performance : [table id=23 /]

Future Prospects: The Company is operating in an Important Sector and doing everything right. The growth in Topline and NPM was looking attractive. There is a debt issue, But it will not become an issue as the operating profit sufficiently covers it.