Focus is on UPL shares after a rating by Fitch, a dire prognosis due to low demand and subpar EBITDA

Focus is on UPL shares after a rating by Fitch, a dire prognosis due to low demand and subpar EBITDA

Fitch lowered the senior unsecured ratings and senior unsecured notes of UPL Corp. from 'BBB-' to 'BB+'.

almost the last half-year, the stock has seen a decline of almost 17%.

The reduction of UPL Corporation's long-term issuer default rating by global rating agency Fitch Ratings will put attention on UPL shares on February 16.

Due to protracted destocking in China and output surpassing capacity, Fitch cut the ratings to 'BB+' from 'BBB-,' citing negative 9MFY24 EBITDA and reduced global crop-protection market demand. It's not looking good.

Fitch lowered the senior unsecured ratings and senior unsecured notes of UPL Corp. from 'BBB-' to 'BB+'. The recovery rating for the senior unsecured notes is "RR4".

UPL's stock increased 1.4% to settle at Rs 488.4 on the NSE on February 15. But the stock has dropped more than 17 percent in the last six months. By contrast, throughout the same period, the benchmark index Nifty 50 has increased by almost 11%.

During the October–December quarter, UPL recorded a quarterly loss as it struggled with declining pricing, depleted inventories, and sluggish demand. Brokerages are worried about the company's growth future due to its lower-than-expected performance, and the stock has started a new downward trend.

The business declared a net loss of Rs 1,217 crore, which was more than the Rs 527.80 crore street expectation. UPL earned a net profit of Rs 1,326 crore the previous year.

Additionally, revenue decreased by about 28% to Rs 9,887 crore from Rs 13,679 crore during the base year.

Disappointed with the Q3 results of the firm, DAM Capital has lowered its recommendation of'sell' for the shares, with a price objective of Rs 462. Jefferies has maintained its 'buy' recommendation on UPL while lowering its price target to Rs 635 in light of the dismal Q3 statistics. Additionally, the brokerage lowered its FY25–26 EPS goal by 13–15%.

The firm anticipates that the pressure will persist for the next January–March quarter due to the poor market environment, and that business will now normalize starting in Q2FY25 rather than H1FY24.