UPL (UPL)

FairStock Score: 50/100 — MIXED

Score breakdown: P/E: 1/3 · ROCE: 0/2 · Growth: 0/2 · Dividend: 0/1

Key Financials

Strengths

• Free cash flow is positive at ₹8,328 Cr, providing some buffer for deleveraging.
• Latest quarter sales of ₹12,269 Cr with ₹490 Cr net profit shows operating recovery from a weak base.
• Piotroski F-Score of 7/9 suggests improving financial fundamentals.
• Book value of ₹346.06 gives some asset backing, though P/B is 1.86.
• Sales growth of 8.72% in the latest period is better than the 5-year CAGR of 3.80%.

Concerns

• Low profitability: ROE of 6.01%, ROCE of 7.66%, and net margin of roughly 4% indicate weak capital efficiency.
• High leverage and distress risk: Debt/Equity of 0.94 and Altman Z-Score of 1.61 are concerning.
• Valuation is rich: P/E of 28.33, Graham Number of ₹400.69 vs price ₹642.05, and DCF intrinsic value of ₹72.93 imply no margin of safety.
• The 4185% profit growth is a low-base effect and not sustainable; 5-year revenue CAGR of only 3.80% reflects limited long-term growth.

AI Analysis

When I run my rule over UPL, the numbers do not excite me. This is not the kind of business I can put in the 'wonderful company' box. Return on equity is just 6.01% and ROCE is 7.66%, so the company is not earning a meaningful spread over its cost of capital. The latest quarterly net profit of ₹490 Cr on sales of ₹12,269 Cr translates to a net margin below 4% — hardly a pricing-power franchise. The 4185% profit growth looks eye-catching, but that is a low-base mirage; five-year revenue CAGR is only 3.80%. A cyclical, commodity agrochemical business with modest growth and thin margins doesn't offer a durable moat. Financial health worries me more. Debt/equity is 0.94 and Altman Z-Score is 1.61, which historically sits in the danger zone. Piotroski F-Score of 7/9 shows some recent improvement, and free cash flow of ₹8,328 Cr is positive, but leverage and weak profitability leave little room for error. Valuation is the final nail. At ₹642.05, the P/E is 28.33, even though ROE is only 6% and book value is ₹346.06. Price-to-book of 1.86 looks rich for such returns. The Graham Number is ₹400.69, so the current price carries a negative margin of safety. The stated DCF intrinsic value of ₹72.93 is far below the market price; even allowing for aggressive assumptions, the safety margin is absent. Promoter holding of 33.50% is moderate, not the high insider ownership I like to see. In Buffett language: 'It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.' UPL today is a fair-to-stressed business being valued as if it were a growth franchise. I would wait until the price offers protection and the balance sheet is cleaner.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer