Company Report | Q1 FY12 Result Update

LONG TERM INVESTMENT CALL

17 August 2011

BUY

Industry CMP (INR) Target (INR) Upside / Downside (%) 52 week High/Low (INR) Market Cap (INR MN) 3M Avg. Daily Volumes (000s) P/E (FY13E) Shareholding Pattern

Agrochem icals 148 180 22 220 / 126 68,200 1,075 7.1

Acquisitions to boost revenue growth United Phosphorus Ltd (UNTP) posted strong result in Q1 FY12 registering ~27% YoY growth in revenues to INR 18,220mn. Growth in revenue was driven by 25% increase in volume and 1% rise in prices. Organic volume increased by 17% while acquisitions showed 8% growth in volumes. Strong revenue growth was seen in all geographies- rest of world 35%, India 32%, North America 32% and EU 6% on YoY basis. Latin America also continued the growth trend in agrochemical sales. UNTP recently acquired 51% stake in DVA Agro Brasil (DVA) for USD150mn to strengthen its position in Latin America. DVA, which posted revenue of USD 130mn in CY10, is a formulator and marketer of crop protection products in Brazil. It caters the requirements of USD 7bn Brazilian agro-chemical market. UNTP would infuse cash of ~USD100mn while remaining portion would be used for buyouts. DVA is currently building new capacities for new product categories.

Stock Performance EBITDA increased by 19% YoY to INR 3,449mn with 117bps reduction in EBITDA margin to 18.5%. Net profit soared by 29% YoY to INR 1,866mn in the quarter. Profit Margin remained flat at ~9.8% despite abnormal increase in tax provisions. Outlook & Valuation UNTP would benefit from healthy monsoon scenario in FY12 and integration of subsidiaries- DVA, Sipcam Isagro Brazil and Cerexagri. Performance (%)
1M 3M 12M

The management has increased its revenue guidance to 25-30% sales growth vs. 12-14% stated previously for FY12. EBITDA margin is expected to stay ~21% level. Growth in sales would be driven by increase in volume in present business and acquisitions. UNTP continues to maintain high level of cash for suitable acquisition in its portfolio.
(INR Mn)

UNTP NSE Nifty

* Source: ACE Equity

1.5 -0.6

-2.2 -0.7

-11.9 9.2

Particulars Total Income EBIDTA Reported PAT

* Source: ACE Equity, Unicon Research

Actual 19,008 3,836 1,866

Stock is currently trading at 7.1x its FY13E earnings. We recommend BUY with a long price target of INR 180.

Wealth Research, Unicon Financial Intermediaries Pvt. Ltd Email: wealthresearch@unicon.in

Consolidated Financials
(INR Mn)

Q1 FY12 Net Revenue Other Operating income Net revenue & Other operating income Other income Total Income Operating Exp. EBITDA EBITDA (%) Depreciation EBIT EBIT (%) Financial charges PBT Tax Provision Tax Rate (%) PAT Adjt. for Exceptional Items & Others Reported PAT Reported PAT (%) EPS
Source: Company, Unicon Research

Q1 FY11 14,302 384 14,686 186 14,872 11,794 2,892 19.7 472 2,606 17.5 1,004 1,602 156 9.8 1,446 0 1,446 9.7 3.2

Y-o-Y 27.4 4.7 26.8 107.6 27.8 28.6 19.3 -117 bps 33.2 23.1 -65 bps -12.9 45.6 198.1 1022 bps 29.1 NA 29.1 10 bps 23.9

Q4 FY11 18,055 514 18,569 250 18,819 14,896 3,673 19.8 661 3,263 17.3 571 2,691 58 2.2 2,633 -140 2,493 13.2 4.7

Q-o-Q 0.9 -21.9 0.3 54.7 1.0 1.9 -6.1 -126 bps -4.9 -1.7 -46 bps 53.1 -13.3 704.8 1783 bps -29.1 NA -25.2 -343 bps -14.9

18,220 401 18,621 387 19,008 15,173 3,449 18.5 628 3,207 16.9 875 2,332 466 20.0 1,866 0 1,866 9.8 4.0

Wealth Research, Unicon Financial Intermediaries Pvt. Ltd Email: wealthresearch@unicon.in

Unicon Investment Ranking Methodology

Rating Return Range Buy >= 20% Accumulate 10% to 20% Hold -10% to 10% Reduce -10% to -20% Sell <= -20%

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