UPL Stock Rises on Brokerage Upgrade
Shares of UPL Ltd., a leading manufacturer and marketer of agrochemicals, industrial chemicals, chemical intermediates, and specialty chemicals, rose 3.5% on the National Stock Exchange (NSE) at 11:00 a.m. IST on September 14, 2023, after brokerages upgraded the stock to “Buy”. The stock opened at Rs 615.55, up by 1.2% from the previous close.
Antique Stock Broking upgraded the stock to “Buy” with a target price of Rs 720 per share, citing the stabilizing of product prices and receding channel inventory. The brokerage also expects UPL’s revenue and EBITDA growth to rise in the second half of fiscal year 2024 (2HFY24) due to signs of improvement in the industry with respect to channel inventory situation as prices have stabilized since June 2023.
The brokerage also expects UPL to see a decent volume off-take from 3QFY24 onwards with demand kicking in from NAFTA and LATAM. On the other hand, realization growth could come back from 4QFY24 onwards.
Analysts at Antique also expect the company to reduce debt by around $300 million YoY during FY24 due to lower raw material prices and strong cash flow generation aided by the expectation of volume growth in 2HFY24.
The upgrade by Antique Stock Broking comes after a similar move by JM Financial, which also upgraded the stock to “Buy” with a target price of Rs 720 per share.
The positive sentiment on UPL’s stock is also supported by the company’s strong fundamentals. UPL is a leading player in the global agrochemicals market, with a strong presence in Asia, Latin America, and Africa. The company has a wide product portfolio and a strong distribution network.
UPL is also well-positioned to benefit from the increasing demand for agrochemicals in emerging markets. The company is expanding its production capacity and investing in research and development to meet the growing demand.
Overall, the upgrade by Antique Stock Broking and JM Financial is a positive development for UPL’s stock. The stock is likely to continue to outperform the market in the near term.
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