UPL share price: Shares of agrochemical player UPL Limited cracked 13% on Monday, February 23, after the company announced a group structuring plan to integrate its Indian and overseas crop protection businesses, prompting negative reactions from brokerages and investors.
UPL share price hit the day’s low of ₹650.40, falling 13.48% from its last closing price of ₹751.75 apiece on the BSE.
Why are UPL shares falling today?
UPL, last Friday, said it is undertaking a three-step restructuring to create UPL Global (UPL 2) as a unified India and international crop protection platform, positioning it as the world’s second-largest listed pure-play crop protection company.
The plan involves merging UPL SAS into UPL, demerging the India Crop Protection business into UPL Global, and merging UPL Cayman into UPL 2, alongside Advanta’s IPO, consolidating its seeds and Decco businesses.
UPL will remain the parent and capital allocator, with plans to enhance transparency and potentially eliminate the prevailing conglomerate discount to UPL.
The restructuring simplifies the group into independently benchmarkable pure plays, improving transparency, strategic focus, driving synergies and enabling value unlocking. UPL 2 becomes a focused global crop protection platform, while UPL 1 sharpens its manufacturing-led B2B positioning.
The move also supports subsidiary-level capital raises, accelerates deleveraging, and strengthens the pathway to valuation re-rating, said analysts at Motilal Oswal Financial Services.
However, the move does not address the current debt overhang, prompting a cautious view from another domestic brokerage Nuvama Research. “The transaction is cash and tax neutral, protects minority interests and does not alter the capital structure, with no material impact on current leverage overhang. Given the recent stock run-up, unresolved leverage concerns and post-restructuring dilution, we downgrade the stock to ‘HOLD’,” said the brokerage.
The said restructuring keeps total debt similar, even though redistributed between two entities. Net debt in UPL Global should be ~ ₹19000 crore, while that in the standalone business should be ~ ₹3200 crores. “Deleveraging here on would remain contingent to cash flow generation and working capital management, which in our view is event neutral,” it added, while revising UPL share price target to ₹816 apiece.
Meanwhile, Motial Oswal Financial Services said that with UPL Global and Advanta becoming independent pure plays, the group separates a mid-teen margin, volume-led crop protection business from a ~25% ROCE, ~23% EBITDA margin seeds platform, enabling each to be valued against its respective global peer set and potentially command multiples aligned with their return profile and capital intensity rather than a blended group valuation.
It expects UPL to report a CAGR of 8%/12%/37% in revenue/EBITDA/PAT over FY25-28 and reiterated a Neutral rating on the stock with a target price of ₹730.
UPL share price trend
Amid today’s fall, UPL shares have trimmed their annual gain to 2.55% while it has risen 41% in two years.
In the near term, the BSE 200 stock, with a market capitalization of ₹55,800 crore, has lost 18% on a year-to-date (YTD) basis and 12% in three months.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
