United Phosphorus –Buy- Angel Securities
United Phosphorus (UPL) ranks among the top-5 generic agrichemical manufacturers in the world. The $40 billion (CY2008) global agrichemical industry is dominated by top-6 innovators, with a large share of patented (28%) and off-patent market (32%), with global generic players accounting for the balance 40%. Additionally, with patents for products worth $3-4 billion expiring during 2009-14, global generic players are likely to benefit further.
We expect UPL to post CAGRs of 9% and 17% in sales and PAT over FY2010 12E, respectively. At the current valuation of 10.1x FY2012E EPS , the stock is attractively valued as compared to its global (10.4x) and domestic peers (12.0x) and historic average (15.0x). We initiate coverage on the stock, with a BUY rating and a target price of Rs226, valuing the stock at 13x FY2012E EPS.
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