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Anand Rathi Report
UPL Ltd. has unveiled a strategic three-phase restructuring of its operations to establish a pure-play listed crop protection company by consolidating its global and domestic franchises. This initiative streamlines the corporate structure, improves business visibility and facilitates accelerated deleveraging.
The UPL shareholders receive shares in the new crop protection entity (UPL Global) via demerger, alongside share issuances from merging India (UPL SAS) and international (UPL Corp) crop protection subsidiaries into a new platform. 1:1 entitlement for every UPL share yields one UPL Global share (minor subsidiary merger adjustment), creating two distinct listed entities.
ALSO READ:UPL To Integrate Indian, Overseas Crop Protection Business Into Single Entity
Outlook and Valuation:
Anand Rathi maintain that this corporate restructuring, albeit strategically sound, delivers limited immediate balance sheet relief. Absolute debt levels stay largely static post-transaction. Financially, this appears primarily as a value reclassification rather than genuine balance sheet repair-yielding neutral near-term outcomes where upside depends on operational delivery over time, not transaction mechanics.
Thus, considering this exercise as largely neutral, the brokerage retains Buy rating on the stock with an unrevised target price of Rs 860, valuing it at 15x FY28e earnings per share.
Key Risks:
- Delayed demand growth in key markets;
- volatile commodity prices;
- adverse weather condition; and
- unfavorable forex movement.
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ALSO READ: UPL Share Price Cracks As Nuvama Downgrades Stock After Restructuring Proposal
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