United Phosphorous - Diwali 2012 Pick - Angel Broking

United Phosphorus (UPL) figures among the top five generic agrichemical players in the world, with a presence across major markets such as the U.S., EU, Latin America and India.

The total off-patent market is worth US$29bn, of which a mere US$16bn is currently being catered by generic players. Furthermore, 61% of the same is controlled by the five largest generic players, including UPL. Given the high entry barriers by way of high investments, entry of new players is restricted. Thus, amidst this scenario and on account of having a low cost base, we believe UPL enjoys an edge over competition and is placed in a sweet spot to leverage the upcoming opportunities in the global generic space.

Over FY2012-14E, we estimate UPL to post a 10% and 18.4% CAGR in its sales and PAT, respectively. Currently, the stock is trading at an attractive valuation of 6.7x FY2014E EPS. Hence, we maintain our Buy view on the stock with a target price of Rs.170.

Source : Equity Bulls

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