United Phosphorus Posts A Healthy Q1FY14 Result

United Phosphorus (UPL), a company which has its interests in manufacturing and marketing of chemical products (agrochemicals, industrial chemicals and other non-agro chemicals), posted healthy a Q1FY14 result on a consolidated basis. UPL's topline showed growth of 11% to Rs 2456 crore. The company generated revenues of Rs 1237 crore from its agrochemical products and Rs 226 crore from the non-agro products, which grew by 41% and 17% respectively.

UPL's operating expenses increased by Rs 171.41 crore (9%) to Rs 1999 crore in Q1FY14 on a YoY basis, due to a rise in the consumption of material and packing material and other expenses. However, the total expenditure for the quarter remained almost unchanged as a percentage of revenue, compared to the expenses in the corresponding period of the last fiscal.

Further, the operating income for UPL went up by 16% to Rs 457 crore in Q1FY14. Interestingly, the net profit for the company jumped by 7% to Rs 212 crore. Moreover, the operating margin grew by 85 basis points to reach 18.59%. Due to an increase in finance expenses (by 22% to Rs 136 crore) during Q1FY14, the net margin declined marginally by 27 basis points to 8.63% on a YoY basis.

On the valuations front, UPL is trading at a TTM PE of 8.71x. Considering the healthy performance of company, we recommend a ‘hold’ on this scrip