UPL Shares Rally as Citi’s Positive Outlook Boosts Confidence in Latin American Crop Volumes
UPL shares experienced a 2 percent intraday surge on September 21, breaking a two-day downtrend and reflecting renewed investor optimism. Recent reports from leading brokerages, expressing a positive outlook for agri-chemical companies in Latin America, played a pivotal role in driving the stock’s upward momentum.
As of 12:30 pm on the NSE, UPL stock was trading at Rs 625.10 per share, marking a gain of Rs 2.60, equivalent to 0.42 percent. The stock reached an intraday peak of Rs 635 before leveling off.
Despite enduring a nearly 13 percent decline in year-to-date performance, UPL has been on an upward trajectory since August 18.
In its financial results for the April-June quarter, the company reported a 17.17 percent year-on-year decline in revenue from operations, amounting to Rs 8,963 crore. Net profit also witnessed an 89.85 percent year-on-year dip, resting at Rs 102 crore. The operating profit margins for the quarter contracted by 600 basis points compared to the previous year, settling at 14 percent.
Brokerage firm Citi has bestowed a ‘buy’ rating upon UPL stock, anticipating substantial upside potential from its current valuation and setting a target price of Rs 800 per share.
Citi’s assessment is grounded in UPL’s significant revenue generation from Latin America, followed closely by Northern American markets. The brokerage pointed out, “Recent data for the first half of CY24 indicates a positive demand recovery. United States farmers are expected to achieve profitability levels above historical norms in CY23. Additionally, the US Agriculture Department foresees an upswing in soybean production in Latin America during the current fiscal year.”
Domestic brokerage Prabhudas Lilladher, in a recent sectoral update, also highlighted Latin America’s robust performance, with Brazil, the region’s largest country, surpassing the US in production volumes. The report stated, “In the case of soybeans and corn, Brazil is poised to dethrone the US as the world’s leading cotton exporter.”
UPL is a key player in the agricultural solutions and crop protection sector, manufacturing a diverse range of agrochemical products, including pesticides, herbicides, and fungicides, aimed at enhancing crop yields and quality.
