Buy United Phosphorus - 4QFY2012 Result Update - Angel Broking

For 4QFY2012, United Phosphorus's (UPL) revenue grew by 17.4% yoy to Rs.2,119cr. However, the company's adjusted net PAT declined by 11.5% to Rs.205cr. Management has given positive revenue guidance of 15% for FY2013 and OPM guidance of 18-20%. In spite of factoring in conservative numbers, the stock is trading at attractive valuations of 6.1x FY2014E EPS. Hence, we maintain our Buy rating on the stock.

Strong revenue growth: UPL reported strong revenue growth of 17.4% yoy to Rs.2,119cr during 4QFY2012. Robust growth was supported by a 21% yoy increase in international business, whereas the domestic business declined by 23% yoy. Volumes continued to be the key growth driver, moving up by 12% yoy in 4QFY2012. OPM expanded by 20bp yoy during the quarter. However, due to a dip in other income, adjusted net profit came in at Rs.205cr, declining by 11.5% yoy.

Outlook and valuation: We expect UPL to post a CAGR of 7% and 23.4% in its sales and PAT over FY2012-14, respectively. At current valuations of 6.5x FY2014E EPS, the stock is attractively valued. Hence, we maintain our Buy recommendation on the stock with a revised target price of Rs.183.

Source : Equity Bulls

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