UPL - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 2.8

🌿 Fundamental Analysis of UPL Ltd.

✅ Strengths

Earnings Momentum

PAT Qtr: ₹1,075 Cr vs ₹902 Cr — impressive 826% YoY growth

EPS: ₹10.6 — improving earnings base

FII Hold ↑ 0.68% — foreign investors showing interest

Technical Strength

Price above DMA 50 (₹672) and DMA 200 (₹621) — bullish trend

MACD: +19.9 — strong upward momentum

RSI: 69.5 — nearing overbought, but confirms strength

⚠️ Concerns

Weak Return Metrics

ROE: 3.01%

ROCE: 7.66% — both are low for long-term compounding

Valuation Concerns

P/E: 73.3 vs Industry PE: 36.5 — highly overvalued

PEG Ratio: -1.82 — negative PEG suggests unsustainable or unreliable growth

Book Value: ₹346 vs Price: ₹726 — ~2.1x book

Debt Load

Debt-to-Equity: 0.86 — relatively high for a cyclical business

Dividend Yield: 0.83% — modest, not attractive for income investors

DII Hold ↓ 0.47% — domestic institutions reducing exposure

📉 Ideal Entry Price Zone

Given the valuation and technical indicators

Entry Zone: ₹640–₹680

Near DMA 50 and below RSI overbought threshold

Offers better margin of safety if price corrects

🧭 Long-Term Investment Outlook

UPL is not a strong long-term candidate at current levels. While recent earnings are impressive, low ROE/ROCE and stretched valuation make it risky for compounding. It may suit short-term momentum traders, but not conservative long-term investors.

Holding Period: 6–12 months

Reassess if ROE improves to 10%+ and PEG turns positive

Monitor debt levels and margin sustainability

🚪 Exit Strategy (If Already Holding)

Partial Exit Zone: ₹740–₹760

Near 52-week high and psychological resistance

Full Exit

If ROE remains below 5% for 2+ quarters

If PEG stays negative and EPS stagnates

If price breaks below ₹650 and fails to recover

Reinvest: Only if valuation compresses and return metrics improve

Would you like a side-by-side comparison with peers like PI Industries, Sumitomo Chemical, or Bayer CropScience to identify better long-term agrochemical plays?

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