UPL Rockets Up: Anand Rathi Issues STRONG BUY Signal with Rs820 Target After Stunning Q2 Beat!

Anand Rathi's latest research report highlights a robust Q2 performance by UPL Limited, beating market expectations. The company posted revenues of Rs120.2 billion and EBITDA of Rs22 billion, marking year-over-year growth of 8% and 40% respectively. UPL also achieved a Profit After Tax (PAT) of Rs4.4 billion, a significant improvement from a Rs4.3 billion loss in Q1 FY25. This recovery was fueled by a 7% increase in sales volumes, although prices saw a slight 2% decline year-over-year. The company has boosted its FY26 EBITDA growth guidance to 12-16% from the earlier 10-14%, anticipating strong growth in the second half of FY26 primarily driven by volumes and improved operational efficiency, with prices expected to remain stable. UPL is targeting a net-debt-to-EBITDA ratio of 1.6-1.8x by the end of FY26, with substantial debt reduction planned over the next 18-24 months, potentially unlocking value through business segment IPOs. The firm believes the challenges related to inventory overhang are largely behind UPL, with a gradual recovery anticipated in H2 FY26. Anand Rathi's outlook is positive, expecting growth to be driven by a focus on differentiated solutions and new product launches that should improve margins. Consequently, the brokerage has upgraded its rating on UPL to BUY and increased its 12-month price target to Rs820, valuing the stock at 16 times its H1 FY28 Earnings Per Share (EPS).

Impact: This upgrade and positive outlook are expected to significantly boost investor confidence in UPL Limited, potentially leading to an increase in its stock price. The improved guidance and deleveraging plans address key concerns, positioning the company for growth. This news is highly impactful for the Indian agrochemical sector and its investors. Rating: 9/10

Difficult Terms: EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. It's a measure of a company's operating performance. PAT: Profit After Tax. This is the net profit remaining after all expenses and taxes have been deducted. FY26: Fiscal Year 2026 (typically April 1, 2025, to March 31, 2026). H2 FY26: The second half of Fiscal Year 2026. Net-debt/EBITDA: A financial ratio measuring a company's ability to pay off its debts. It indicates how many years of EBITDA it would take to pay off the net debt. Inventory Overhang: A situation where a company has a large amount of unsold inventory, which can lead to price reductions and lower profits. Differentiated Solutions: Products or services that are unique and distinct from competitors', offering specific advantages to customers.