UPL - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 3.1

📊 Financials: UPL shows mixed fundamentals. ROCE is weak at 1.26%, while ROE is modest at 8.20%, reflecting limited efficiency in capital utilization. Debt-to-equity is low at 0.07, indicating a healthy balance sheet. Quarterly PAT surged (₹416 Cr vs ₹122 Cr), showing strong recovery with profit variation of +823%. EPS stands at ₹37.0, supporting earnings visibility.

💰 Valuation: Current P/E of 58.6 is significantly above the industry average of 27.6, suggesting overvaluation. Book value is ₹162, giving a P/B ratio of ~4.6, which is moderately high. PEG ratio is negative (-4.85), reflecting weak earnings growth relative to valuation. Dividend yield at 0.81% provides modest income support.

🏢 Business Model & Advantage: UPL operates in agrochemicals and crop protection, with strengths in global distribution, diversified product portfolio, and focus on sustainable farming solutions. Competitive advantage lies in global presence and innovation in bio-solutions. However, profitability pressures and high valuations reduce margin of safety.

📈 Entry Zone: Current RSI at 50.0 suggests neutral conditions. An attractive entry zone lies between ₹680–₹720, closer to support levels and near DMA 200, offering margin of safety.

🕰️ Long-Term Holding: Suitable for long-term investors due to global presence and diversified agrochemical portfolio. However, valuations are stretched, making staggered accumulation advisable during corrections.

Positive

• ✅ Low debt-to-equity (0.07)
• ✅ Strong quarterly PAT recovery (+823%)
• ✅ Global presence in agrochemicals and crop protection
• ✅ EPS of ₹37.0 supports earnings visibility

Limitation

• ⚠️ Weak ROCE (1.26%) and modest ROE (8.20%)
• ⚠️ High P/E (58.6) vs industry average (27.6)
• ⚠️ Negative PEG ratio (-4.85)
• ⚠️ Dividend yield modest at 0.81%

Company Negative News

• 📉 Decline in DII holdings (-0.92%)
• 📉 Weak return metrics despite revenue base

Company Positive News

• 📈 Increase in FII holdings (+2.11%)
• 📈 Strong quarterly PAT growth (+823%)

Industry

• 🌐 Agrochemical sector supported by global demand for crop protection and sustainable farming
• 🌐 Industry PE at 27.6, showing UPL trades at premium valuation

Conclusion

🔎 UPL is a globally diversified agrochemical company with strong quarterly recovery and low debt. However, weak return metrics and stretched valuations reduce attractiveness. Investors may consider accumulation near ₹680–₹720 for margin of safety, with long-term holding dependent on sustained profitability and sector demand.

Would you like me to extend this with a peer benchmarking overlay against Bayer CropScience, PI Industries, and Syngenta, or a sector rotation basket scan to identify undervalued agrochemical peers for compounding?