Investment Analysis and Financial Insights of UPL Ltd: A Comprehensive Review

UPL Limited (UPL Ltd) has been a topic of interest for many investors due to its dynamic business model and strong financial performance in various financial years. In this article, we will delve into the company's recent financial health, projected future performance, and key financial ratios that can guide potential investors in making informed decisions. This thorough analysis aims to provide a holistic view of UPL Ltd's current position and future prospects.

Current Market Performance

As of 24 June 2018, UPL Ltd’s share price stands at INR 640.2. However, the fair value of the share, based on discounted cash flow analysis, is estimated at INR 552.15. This suggests that there may be opportunities for investors seeking a margin of safety. Considering the earnings estimates for March 2018, the stock is expected to reach INR 730.7 in the next 6 to 12 months, offering a potential return of about 10%. Given this outlook, it is recommended to buy and hold UPL Ltd for investors looking for a consistent growth trajectory.

Historical Financial Performance

In the financial year ending on 31 March 2015, UPL Ltd showcased a strong performance with the following key metrics:

Sales Growth: 12.25% Profit Increase: 20.45% Margin Improvement: 0.64% Borrowings Reduction: -2.06 Share Price Increase: 104.38%

For the fiscal year ending on 31 March 2016, despite a slight reduction in sales growth and profit, the company continued to exhibit growth with:

Sales Growth: 16.19% Profit Reduction: -17.83% Margin Declined: -2.77% Borrowings Increased: 60.28% Share Price Increase: 9.51%

By the financial year ending on 31 March 2017, UPL Ltd emerged even stronger with:

Sales Growth: 16.12% Profit Increase: 83.72% Margin Improved: 3.90% Borrowings Increased: 20.98% Share Price Increase: 54.43%

For the outlook up to March 2018, the company is expected to report:

Sales Growth: 6.54% Profit Increase: 22.63% Margin Improved: 1.60% Borrowings Reduced: -34.95% Share Price Decreased: -4.30% Estimated Share Price: INR 730.7

Forward-looking, for the financial year ending on March 2019, the projections are:

Sales Growth: 5.72% Profit Increase: 24.23% Margin Improved: 2.13% Borrowings Reduced: -64.13% Share Price Increased: 24.24% Estimated Share Price: INR 907.8

Financial Ratios Analysis

To better understand UPL Ltd's financial health, it is essential to examine its key financial ratios. Here are some important ratios for the financial year ending on 31 March 2017:

Net Income/Sales: 0.11 Net Income/Pre Tax Income: 0.90 Pre Tax Income/EBIT: 0.72 EBIT/Sales: 0.16 Sales/Assets: 0.80 Assets/Equity: 2.79 Return on Equity: 24% Return on Assets: 8% Retention-Based Growth Rate: 24%

Additionally, here is a detailed breakdown of the company's enterprise value and other financial metrics:

Market Capitalization: INR 38712 crores Add: Debt: INR 6361 crores Less: Non Current Investments: INR 378 crores Enterprise Value: INR 44695 crores Net Profit: INR 1727 crores Add: Interest: INR 735 crores Less: Tax Savings on Interest: INR 75 crores Less: Other Income: INR 452 crores Firm Profits: INR 1935 crores Sales: INR 16312 crores Add: Other Income: INR 452 crores Total Income: INR 16764 crores Firm Margin: 12% Enterprise Value to Total Income: 2.67 (Below 2 is considered better) Enterprise Value to Total Income to Firm Margin: 23.09 (Below 15 is investment-friendly) Price to Earnings: 22.42 (Below 18 is investment-friendly) Price to Book Value: 5.29 (Below 2 is investment-friendly) Debt to Equity: 0.87 (Below 2 is investment-friendly) Free Cash Flow to Firm: INR -2707 crores Free Cash Flow to Equity: INR -3442 crores Price to Earning Growth: 0.27

Conclusion

Based on the analysis provided, UPL Ltd presents a compelling investment opportunity with growing sales and profits. The company has maintained a strong equity position and has shown a consistent improvement in margins. The financial ratios suggest a solid underlying business model that can support future growth. As of our analysis, with the current market conditions and projected performance, investors are advised to consider UPL Ltd for their portfolios, aiming for long-term growth and stability.