UPL Ltd, a major player in the agrochemical sector, remains confident about its performance for FY25 despite posting a net loss in the latest quarter. The management has reaffirmed its growth targets, projecting a 4–8% revenue increase and a significant rise of over 50% in EBITDA, reflecting a positive outlook for the company's performance moving forward.
This recovery comes after the company completed the liquidation of its high-cost inventory, a factor that had previously impacted its financials.
Revenue growth driven by volume increase
In the September quarter, UPL reported a revenue rise of 9% year-on-year to ₹11,090 crore, up from ₹10,170 crore during the same period last year. The growth in revenue was primarily driven by a 16% year-on-year increase in volumes, while prices saw a decrease of 7%. Near-stable foreign exchange rates contributed to the stable revenue numbers.
The management highlighted that the volume growth aligns with UPL's progress toward meeting its EBITDA and net debt targets for FY25, demonstrating the company's resilience amid market challenges.
Destocking and stabilised prices support the positive outlook
UPL's management stated that, following a period of destocking, prices in the sector have now stabilised, further supporting the company's flagship crops business. This business segment is expected to witness higher-than-industry growth, an encouraging sign for those who invest in stocks. The company's positive expectations for FY25 have also contributed to a more optimistic outlook, as the management remains focused on achieving its EBITDA and revenue goals.
Debt reduction efforts through rights issues and other measures
In addition to operational improvements, UPL is working to strengthen its financial position through a series of debt-reduction measures. The company has announced a rights issue worth approximately $400 million as part of its strategy to address its substantial debt.
These steps are seen as critical in reinforcing the company's balance sheet and paving the way for potential re-rating as financial risks decrease. Investors interested in UPL's debt reduction initiatives may find these developments promising as they explore options to invest in stocks.
Net loss widens, but recovery path is anticipated
Despite the positive growth in revenue, UPL reported a net loss of ₹443 crore in the September quarter, a figure that widened from the ₹189 crore loss in the same period last year. However, the company's management remains optimistic about the future, indicating that the worst may now be behind. This perspective, along with a clear recovery strategy, has contributed to a growing sense of optimism surrounding UPL's financial trajectory.
Volume growth boosts company's outlook
UPL's management has emphasised that the growth in volumes has been a key contributor to its revenue increase, a positive sign as the company seeks to meet its FY25 guidance. For investors considering UPL's future, this volume growth reflects a stabilising market and UPL's continued resilience amid economic headwinds.
The growth in UPL's flagship crops business is expected to surpass industry averages, further enhancing the potential appeal of the stock for those looking to invest in stocks.
For android only