KRChoksey: UPL Logs Highest Gross Profit Margin In Recent Quarters; Ebitda Margin To Improve Further
Granules of fertiliser samples sit on display at a fertiliser plant. Photographer: (Andrey Rudakov/Bloomberg)

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

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

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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