UPL Ltd Quarterly Results Q3 FY 25 stock analysis

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Sector Outlook: Netural

Strong operational performance led by recovery in volume and prices

UPL reported 10.3% year-on-year revenue growth but a 1.7% decline quarter-on-quarter, falling slightly below market expectations. The growth was driven by 9% higher sales volume and a 5% price increase, but a 4% forex impact reduced earnings. The company saw strong annual revenue growth in India (+28%), Europe (+28%), North America (+59%), and Latin America (+12%), while other regions declined. EBITDA rose 44.7% quarter-on-quarter to Rs. 19,560 million, with higher margins (17.9%) due to a better product mix, cost control, and rebate adjustments. Net profit stood at Rs. 8,530 million, marking a big turnaround from a loss of Rs. 5,850 million last year. The global crop protection market is recovering, with strong farmer and dealer demand, helping UPL gain market share. By focusing on customer needs, marketing improvements, new product launches, and innovative solutions, the company has managed to improve margins compared to previous quarters.

Key Concall Highlights

Latin America Business Outlook:

UPL’s Latin American business is expected to see strong growth in Brazil and Argentina, led by demand for Mancozeb-based fungicides, acephate-based insecticides, and the Evolution and Feroce product lines.
Currency fluctuations remain a challenge, but Brazil’s soybean harvest season should improve farmer liquidity, supporting better cash flow and reducing credit risks.
The company is strengthening its farmer engagement model through Origeo’s partnership with Bunge, which aims to increase direct sales to large growers and boost market share.

North America Business Outlook:

The North American market continues to perform well due to strong in-season demand and rebate normalization.
Stable pricing for key herbicides like S-metolachlor and higher demand for post-emergent herbicides are expected to drive growth.
Focus remains on expanding sustainable and differentiated products while managing inventory levels and working capital efficiently.
The biocontrol segment is growing, with Nimaxxa (a fungicide for nematode control) now registered in the US, creating new growth opportunities.

Europe Business Outlook:

UPL’s European business is expected to grow due to high demand for fungicides and Natural Plant Protection (NPP) products, such as Proxanil and biostimulants.
The region is seeing better profit margins due to an increased focus on sustainable solutions.
Regulatory support for biocontrol products is helping UPL expand its organic and eco-friendly agriculture solutions, improving market share.

UPL Sustainable Agri Solutions (SAS):

UPL’s Sustainable Agri Solutions segment in India is expected to recover further in Q4FY25, led by higher NPP volumes, post-emergent herbicides, and strong rabi season placements.
Margins improved in Q3FY25 due to better pricing, new product launches, and cost efficiency.
The company is focused on reducing inventory and strengthening its farmer-centric approach.

Advanta Enterprises (UPL’s Seed Business):

Advanta Enterprises saw growth in Q3FY25, and the outlook remains positive due to higher demand for grain sorghum in Argentina, sunflower in Europe, and corn in India.
Margins were lower in H1FY25 due to high input costs, but Q4FY25 is expected to see margin recovery with a better product mix.
A USD 350 million investment from Alpha Wave Global will help Advanta expand its global presence and develop new seed technologies.

Company Guidance:

EBITDA is expected to improve by ~50% in FY25, as per management’s outlook.
The company expects to generate USD 300-400 million in cash flow from operations in FY25.
Several new products are in the pipeline and will be launched in upcoming quarters, contributing positively to revenue.

Debt reduction targets:

USD 750 million to be reduced in FY26.
USD 900 million to be reduced in FY27.

Valuation and Outlook

UPL Ltd. delivered strong performance this quarter and remains positive about its growth for the rest of FY25, supported by higher revenue and better efficiency. The company sees FY25 as a recovery year for the global crop protection market, with demand stabilizing across key regions. As inventory levels return to normal, UPL expects a steady supply chain and consistent ordering from dealers and farmers. While lower agricultural commodity prices may create some challenges in Q4FY25, the company expects strong farmer demand, improved inventory management, and cost efficiencies to support growth. UPL is also focusing on innovative and sustainable products, boosting margins through bio-stimulants and biocontrol solutions, especially in Brazil and Europe. Financially, the company has reduced debt and improved cash flow, aiming to generate USD 300-400 million in operating free cash flow. UPL is on track to achieve its 50% EBITDA growth target with new product launches, cost savings, and a steady market recovery, positioning itself for strong and profitable growth in the coming quarters.