Indian agrochemicals maker UPL posts surprise Q4 profit, sees sales growth in FY25

SRF

13/05/2024 12:08

BENGALURU, May 13 (Reuters) - Agrochemicals maker UPL
 UPLL.NS  reported a surprise quarterly profit on Monday as
revenue fell less than expected amid inventory destocking,
sending its shares up 6.4%.
    The herbicide and insecticide maker said revenue from
operations fell about 15% to 140.78 billion rupees, marking its
fourth straight quarter of decline due to inventory destocking
and soft demand, but beat Street expectations of 122.39 billion
rupees, according to LSEG data.
    Volumes recovered compared to the third quarter, largely led
by strong sales of the company's high-margin sustainable
agriculture portfolio, which contributed to 36% of its crop
protection revenue versus 29% last year, UPL said.
    That helped UPL post a net profit of 400 million rupees
($4.8 million) for the quarter ended March 31, compared with
analysts' expectations of a loss of 3.33 billion rupees. The
company reported a profit of 7.92 billion rupees a year ago.
    UPL said it expects 4%-8% growth in revenue in fiscal 2025
and earnings before interest, tax, depreciation and amortization
(EBITDA) growth of more than 50% for the period.
    Agrochemical and fertilizer companies in India, including
Coromandel International  CORF.NS  and SRF  SRFL.NS , faced a
lackluster fourth quarter, largely due to destocking of
inventory - the process of emptying out excess inventory levels
following low demand.
    Water shortages in southern India also contributed to the
overall lack of demand. 
    "We expect a return to growth and normalization in margins
driven by the agchem market returning to normality in fiscal
2025," said Mike Frank, chief executive of UPL Corporation,
UPL's Mauritius-based unit.
    Analysts are optimistic about the fiscal 2025 outlook for
domestic agri-input firms on expectations of a better monsoon
and higher nutrient-based subsidy - a government programme that
subsidises fertilisers depending on their nutrient content - in
the first half of 2025.
    
($1 = 83.5061 Indian rupees)

 (Reporting by Yagnoseni Das in Bengaluru; Editing by Janane
Venkatraman and Sonia Cheema
)
 ((Yagnoseni.Das@thomsonreuters.com;))