UPL - Multiple Levers To Maintain Margins Despite Inflation In Input Prices: ICICI Securities
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ICICI Securities Report
While the street seems concerned about rising input prices and its likely impact on UPL Ltd.’s Ebitda margin, we note the company has maintained the margin in a narrow band of 17.5-20.4% over the relatively long period from FY09 to FY21E.
The company has multiple levers to sustain the margin at the said level, the levers being -
- selective price hikes and tweaking of trade margins;
- improvement in revenue mix; and
- cost-saving initiatives.
Besides, while its global market share stands at approximately 10%, it is the leader in its key markets such as India, Chile, Mexico and Columbia, which we believe indicates strong pricing power.
Company will continue to benefit from synergy benefits as well as operating leverage in FY22E-FY23E too.
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