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8/4/2019 United Phos. - UNICON

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Wealth Research, Unicon Financial Intermediaries Pvt. Ltd

Email: [email protected]

NG TERM INVESTMENT CALL

BUY17 August 2011

Company Report | Q1 FY12 Result Update

Acquisitions to boost revenue growth

United Phosphorus Ltd (UNTP) posted strong result in Q1 FY12

registering ~27% YoY growth in revenues to INR 18,220mn. Growth in

revenue was driven by 25% increase in volume and 1% rise in prices.

Organic volume increased by 17% while acquisitions showed 8%

growth in volumes. Strong revenue growth was seen in all

geographies- rest of world 35%, India 32%, North America 32% and EU

6% on YoY basis. Latin America also continued the growth trend in

agrochemical sales.

UNTP recently acquired 51% stake in DVA Agro Brasil (DVA) for

USD150mn to strengthen its position in Latin America. DVA, which

posted revenue of USD 130mn in CY10, is a formulator and marketer

of crop protection products in Brazil. It caters the requirements of USD

7bn Brazilian agro-chemical market. UNTP would infuse cash of

~USD100mn while remaining portion would be used for buyouts. DVA

is currently building new capacities for new product categories.

EBITDA increased by 19% YoY to INR 3,449mn with 117bps reduction

in EBITDA margin to 18.5%.

Net profit soared by 29% YoY to INR 1,866mn in the quarter. Profit

Margin remained flat at ~9.8% despite abnormal increase in tax

provisions.

Outlook & Valuation

UNTP would benefit from healthy monsoon scenario in FY12 and

integration of subsidiaries- DVA, Sipcam Isagro Brazil and Cerexagri.

The management has increased its revenue guidance to 25-30% sales

growth vs. 12-14% stated previously for FY12. EBITDA margin is

expected to stay ~21% level. Growth in sales would be driven by

increase in volume in present business and acquisitions. UNTP

continues to maintain high level of cash for suitable acquisition in its

portfolio.

Stock is currently trading at 7.1x its FY13E earnings. We recommend

BUY with a long price target of INR 180.

Industry Agrochem

CMP (INR) 148

Target (INR) 180

Upside / Downside (%) 22

52 week High/Low (INR) 220 / 126

Market Cap (INR MN) 68,200

3M Avg. Daily Volumes (000s) 1,075

P/E (FY13E) 7.1

Shareholding Pattern

Stock Performance

Performance (%)

1M 3M 12M

UNTP 1.5 -2.2 -11.9

NSE Nifty -0.6 -0.7 9.2* Source: ACE Equity

(INR Mn)

Particulars Actual

Total Income 19,008

EBIDTA 3,836

Reported PAT 1,866* Source: ACE Equity, Unicon Research


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Consolidated Financials

(INR Mn)

Q1 FY12 Q1 FY11 Y-o-Y Q4 FY11 Q-o-Q

Net Revenue 18,220 14,302 27.4 18,055 0.9

Other Operating income 401 384 4.7 514 -21.9

Net revenue & Other operating income 18,621 14,686 26.8 18,569 0.3

Other income 387 186 107.6 250 54.7

Total Income 19,008 14,872 27.8 18,819 1.0

Operating Exp. 15,173 11,794 28.6 14,896 1.9

EBITDA 3,449 2,892 19.3 3,673 -6.1

EBITDA (%) 18.5 19.7 -117 bps 19.8 -126 bps

Depreciation 628 472 33.2 661 -4.9

EBIT 3,207 2,606 23.1 3,263 -1.7

EBIT (%) 16.9 17.5 -65 bps 17.3 -46 bps

Financial charges 875 1,004 -12.9 571 53.1

PBT 2,332 1,602 45.6 2,691 -13.3

Tax Provision 466 156 198.1 58 704.8

Tax Rate (%) 20.0 9.8 1022 bps 2.2 1783 bps

PAT 1,866 1,446 29.1 2,633 -29.1

Adjt. for Exceptional Items & Others 0 0 NA -140 NA

Reported PAT 1,866 1,446 29.1 2,493 -25.2

Reported PAT (%) 9.8 9.7 10 bps 13.2 -343 bps

EPS 4.0 3.2 23.9 4.7 -14.9Source: Company, Unicon Research


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Unicon Investment Ranking Methodology

Rating Buy Accumulate Hold Reduce Sell

Return Range >= 20% 10% to 20% -10% to 10% -10% to -20%

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