UPL Shares Jump 5.6% After Brokerages Give Thumbs Up to Q3 Results

Shares of agrochemical company UPL Ltd jumped as much as 5.6% in intra-day trade on Monday after results for the third quarter ended December (Q3) exceeded analyst estimates.

UPL’s net profit surged 77.5% year-on-year to Rs 838 crore in the December quarter compared with a profit of Rs 472 crore in the year-ago period. Revenue from operations increased by a massive 80.7% to Rs 8,892 crore during the quarter.

At 11:39 am, UPL shares were trading at Rs 563.80, up 3.8%, after hitting the day’s high of Rs 573.70. The stock has risen just 5% in the last one year compared with an 11% increase in the benchmark Nifty 50 index.

After the earnings, HSBC gave a ‘buy’ rating on the UPL stock with a target price of Rs 680 per share. The brokerage firm said the company’s margins surprised as the Latin America segment drove growth. It added that UPL’s progress on synergies and balance sheet deleveraging should be rewarded. HSBS also raised the company’s EPS (earnings per share) estimates for FY21-22 by 1-2%.

Another brokerage firm CLSA also retained its positive outlook on the UPL stock. CLSA believed that valuations of the company are attractive at current levels and also raised its FY20-22 EPS estimates by 2-9%. It added that UPL was gaining market share in a tough environment.

Meanwhile, in a separate development, UPL informed through a press release that the Indian tax authorities visited and conducted search at multiple locations of company’s premises in India. During the course of this process, they collected documents and interviewed key personnel of the company, it added.

UPL said it believed that the tax authorities were wanting to understand and review the company’s international operations and transactions.

“We continue our engagement with the authorities and expect this process of review will continue for some time,” it said, adding: “The company conducts its business in compliance with all applicable provisions of law across the globe. The search and investigation by tax authorities were on UPL Limited and not on any individual or a group of individuals as reported in some media reports.”

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