KRChoksey: UPL Logs Highest Gross Profit Margin In Recent Quarters; Ebitda Margin To Improve Further

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KRChoksey Report

UPL Ltd. reported revenue of Rs 78.3 billion (down 0.9% YoY/down 29.7% QoQ) in Q1 FY21.India posted strong growth while pre-buying in North America led to decline in the North America revenue. Volume for the quarter was flat while price declined by 1.0% YoY.

Ebitda for the quarter grew 39.6% YoY (down 3.8% QoQ) while Ebitda margin expanded by 679 basis points YoY to 23.4% in Q1 FY21 (from 16.6% in Q1 FY20). On sequential basis, Ebitda margin expanded 630 basis points QoQ.

Company reported net profit growth of 93.3% YoY (down 10.7% QoQ) to Rs 5.5 billion. Adjusted for exceptional items, profit after tax grew 61.3% YoY (down 26.9% QoQ) to Rs 5.8 billion.

Reported net profit margin for the quarter came at 7.0% (up 343 basis points YoY, up 150 basis points QoQ) while adjusted net profit margin stood at 7.4% (up 284 basis points YoY, up 28 basis points QoQ).

Lower material cost at 45.3% of revenue in Q1 FY21 (versus 53.2% in Q1 FY20) led to gross profit margin (GPM) improvement of 785 basis points YoY (up1,077 basis points QoQ) to 54.7%.

GPM was also supported by the right mix of portfolio. Led by GPM improvement, Ebitda margin improved to 23.4% (up 679 basis points/630 basis points YoY/QoQ) for the quarter, one of the highest in recent times.

Management expects, cost optimization will lead to better margin in the future in the range of 23-25%.

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KRChoksey_UPL_1QFY21_RU_20200813.pdf

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