UPL slips 23% in a month post closure of buyback offer; hits 52-week low

Shares of UPL hit 52-week low of Rs 618.05, down 5 per cent on the BSE in Wednesday’s intra-day trade, falling 23 per cent in a month, after closure of buyback offer on May 20, 2022. The stock of pesticides and agrochemicals company fell below its previous low of Rs 625 that it had touched on February 24, 2022.

UPL bought back 13.43 million equity shares at an average price of Rs 813.92 a piece. The company has utilized Rs 1,094 crore, which represents 99.43 per cent of the maximum buyback size.

On April 7, 2022, the company commenced buyback from shareholders and beneficial owners of the company (other than the promoters, promoter group and persons in control of the company) via open market route. Meanwhile, on June 9, UPL informed that the company’s investment grade credit rating has been maintained at Baa3 by Moody’s with a 'stable outlook.'

UPL expects strong performance (10 per cent plus revenue growth and 12-15 per cent EBITDA growth) in the current fiscal year FY23, supported by superior growth of high-margin differentiated and sustainable solutions, accelerated penetration in select markets and efficient cost and supply chain management.

The company will continue to focus on optimising working capital and investments leading to increase in ROCE and improving leverage ratios. The company is also committed to maintain their investment grade credit rating.

Analysts at Emkay Global Financial Services believe UPL’s strategy to expand their D&S solutions offerings and focus on increasing penetration in high-growth crops segments wil drive sustainable growth and margin expansion. “However, considering higher-than-expected net debt levels and interest thereon, we have cut EPS estimates by 2.6 per cent/0.8 per cent for FY23/FY24,” the brokerage firm added.