UPL stock update: Takeover news, buyback updates and more

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UPL share price: UPL shares ended 5% higher on Thursday, after the company announced a share buyback program. From buzz around UPL’s takeover to the share repurchase, a lot is happening in the company. We take a closer look. 

What is UPL’s business?

  • United Phosphorus (UPL) is a producer of crop protection products, intermediates, specialty chemicals, and other industrial chemicals.
  • They are the largest producer of agrochemicals in India. It is amongst the top five post-patent agrochemical manufacturers in the world.
  • UPL is a global player of crop protection products and has a customer base in 123 countries. It has 23 manufacturing facilities: 9 in India, 2 in Spain, 4 in France,3 in Argentina, and 1 in UK, Vietnam, Netherlands, Italy, and China.

Update on takeover interest

  • UPL is attracting takeover interest from global competitors - the information as of now is private and no official statement has been made by any party.
  • People familiar with the matter have told Bloomberg that UPL has been speaking with advisors. It is evaluating interest from rivals in the crop protection industry.
  • The developments are still in an early stage, and there’s no certainty UPL will decide to pursue a combination - update from an insider. 
  • UPL could also opt to pursue other types of tie-ups with overseas companies or focus on organic growth, update from an insider.

UPL share Buyback announcement

Amid the takeover news, the company has made a buyback announcement. Below are the details:

  • The company has announced a buyback of shares worth up to Rs 1,100 crore from shareholders, excluding promoters.
  • The board has approved the proposal to buy back fully paid-up equity shares of the face value of Rs 2 each from shareholders other than the promoters, the promoters group, and persons in control of the company.
  • UPL will do the buyback through the open market route at a price not exceeding Rs 875 per equity share.
  • In the open market route, the company purchases its shares directly from the market. The transaction is done by the brokers of the company. Hence, investors do not have to make bids or fill out any form. The company will purchase it from the open during a certain window.
  • Taking into consideration the total buyback amount and the maximum buyback price, the buyback translates to 1.65% of the total equity.
  • If the equity shares are bought back at a lower price than the maximum buyback price, the actual number of shares bought back could be more.
  • The promoters' holding in the company is 28.24% as of the December quarter.

UPL news: Update of stake sale in subsidiary ANSL

  • On Thursday afternoon, the company said it will sell 49.98% equity in its non-operational subsidiary firm Agri Net Solutions Ltd (ANSL) to promoter group entity Nerka Chemicals for Rs 1.75 crore.
  • The date of completion of the deal is by March 31 this year.
  • The turnover of ANSL was nil in the previous financial year. Its net worth was Rs 3.42 crore as of March 31, 2021, which is 0.01% of the consolidated net worth of UPL Ltd.

Update from recent quarter results

  • For the December quarter, the company reported a net profit of Rs 1,179 crore, up 24.89% YoY.
  • The revenue from operation stood at Rs 11,297 crore for Q3FY22, up 23.78% YoY.

Brokerages Update

  • Centrum Broking has a BUY call on UPL share with a target price of Rs 960. 
  • Emkay Global has a BUY call on UPL with a target price of Rs 910 with an investment horizon of one year.

In the past five trading sessions, the share has gained 8.16% compared to NIFTY's fall of 0.86%. On Thursday, the share closed at Rs 720.35 per share.

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