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<ul><li><keyword id="333824" type="General" weightage="20" keywordseo="upl" source="Orion">UPL</keyword> is a 100-bagger that has delivered stellar returns in the last 20 years.</li><li>Due to low inventory stocking globally and El Nino impact, the stock has given negative returns in the last one year.</li><li>Analysts believe that a good cropping season in its biggest market Brazil can be a positive trigger.</li><li>The stock is also undervalued and has a good run-up ahead. </li></ul>Mumbai-based agrochemical company UPL has always been a rewarding stock for long-term investors. It has been named in ICICI Securities’ list of 100-bagger stocks. The stock gave 324 times returns to its investors over 20 years, indicating that its business model can stand the test of time. <br /><br />Yet, in the last one year, its stock fell by 13.6% on account of global headwinds. The company derives 40% of its business from Latin America with a majority of that coming from Brazil. And the global offtake of crop protection products like herbicides and pesticides has been dull all of this calendar year. <br /><br />UPL’s most important market, Brazil, has been de-growing for the first half of this calendar year. The market also saw high sales returns. In the June quarter, non-selective herbicides sales were down by 53%, the company said in its Q1 investor presentation. <br /><br />Coming off a supply chain disruption phase, the company like many of its peers was also impacted by Europe banning some herbicides. Distributors have turned cautious – leading to subdued exports from all agrochem players in India. <br /><br />“Globally, there has been a shift from ‘high channel inventory’ earlier (due to multiple supply chain shocks earlier) to ‘carry minimal inventory’, basis commentary from global players,” said Axis Capital.<br /><br /><strong>Rising cropping acreage <br /></strong><br />Yet, there are silver linings seen recently, say analysts. Brazil’s FY24 crop season is expected to be favourable, with 5% production growth in soybean along with acreage expansion of 3% year-on-year. <br /><br />“This indicates upbeat farmer sentiment, presenting a favourable setting for the higher consumption of pesticides. A good season in LatAm can act as a trigger for the re-stocking of global pesticides,” said a report by HSBC Global Research. <br /><br />Moreso, the market also saw farmer profitability fall in the past few years due to lower crop prices. Generic producers (like UPL) could be preferred over innovators. <br /><br />The global industry of crop protection has put pressure on prices along with volumes. They too are showing signs of stabilization. “Prices of China exports have touched previous lows of 2019, indicating a trough. And Glufosinate (a herbicide) prices are already lower than pre-Covid-19 levels and now stabilising,” says HSBC Global Research. <br /><br /><strong>Inherent value to be unlocked <br /></strong><br />In spite of being affected by nature’s vagaries, UPL has remained steady. It also implemented cost optimization initiatives resulting in selling, general, and administrative expenses (SG&amp;A) being lower by 5% year-on-year. <br /><br />“Entered a new chemistry by commissioning and commencing production at the phosgene plant in Dahej during the quarter to manufacture and market phosgene derivative products. Phosgene will also be used in the group’s agchem production,” the company said in its investor presentation. <br /><br />In the June quarter, it pared down its net debt by $160 million to $3.19 billion. “UPL’s balance sheet remains protected, even after assuming a drain on profitability and elevated capital requirements. Although we acknowledge that headwinds remain an overhang, with signs of stabilisation, we expect value to be unlocked in the near future,” says HSBC Global Research. <br /><br />The research firm also believes that its crop protection business is undervalued and has set a target of ₹775 even as the stock is currently trading at ₹602. The only risk to this assumption however is UPL’s inorganic growth strategy. <br /><br />It has grown over the years through a series of acquisitions. And, any unfavourable acquisition could lead to a valuation multiple contraction, says HSBC Global Research.<br /><br /><div type="javascript" title="Custom" contenttype="Text"><cdata><![CDATA[]]></cdata></div><br />

Will this 100-bagger agrichem stock deliver this season?

<p><strong><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Reuters</span></p><p class="caption">Monsanto's Roundup weedkiller atomizers are displayed for sale at a garden shop near Brussels</p></div><p></p></div></div></strong></p><ul><li><strong>Bayer slashed a $2 billion jury award by more than 95% on Thursday as payouts over its cancer-linked Roundup weedkiller continue to mount.</strong></li><li><strong>The German pharmaceuticals giant has successfully reduced three major trial verdicts within the past year.</strong></li><li><strong><strong><a href="https://markets.businessinsider.com/stocks/bayer-stock">Watch Bayer trade live</a>.</strong></strong></li></ul><p><a href="https://markets.businessinsider.com/stocks/bayer-stock">Bayer</a> successfully slashed a jury award of $2 billion by more than 95% to $86.7 million on Thursday as payouts over its cancer-linked Roundup weedkiller continue to mount.</p><p>A state-court jury in Oakland, California ordered the German pharmaceuticals giant to pay the sum to Alva and Alberta Pilliod after deciding Roundup was responsible for their non-Hodgkin's lymphoma, a blood-cell cancer. Judge Winifred Smith slashed the amount after determining it was unconstitutionally high, <a href="https://www.reuters.com/article/us-bayer-glyphosate-lawsuit/in-roundup-case-u-s-judge-cuts-2-billion-verdict-against-bayer-to-86-million-idUSKCN1UL03G">according to Reuters</a>.</p><p>Bayer has successfully reduced two other jury awards in the past year, both in San Francisco. A superior-court judge cut an award of $289 million for Dewayne Johnson, a former school groundskeeper diagnosed with non-Hodgkin's lymphoma, to $78 million in October, <a href="https://uk.reuters.com/article/us-bayer-glyphosate-lawsuit/bayer-asks-california-appeals-court-to-throw-out-78-million-roundup-verdict-idUKKCN1S02DV">according to Reuters</a>. Similarly, a district-court judge trimmed a payout of about $80 million to Edwin Hardeman, who blamed Roundup after he fell ill with the same type of cancer, to about $25 million <a href="https://markets.businessinsider.com/news/stocks/bayer-stock-rallies-judge-cuts-roundup-cancer-payout-25-million-2019-7-1028355427">last week</a>.</p><p>Bayer faces lawsuits from more than 13,000 farmers, landscapers and gardeners following its $63 billion takeover of agrichemical titan and Roundup-owner Monsanto last summer. The company described the latest payout reduction as "a step in the right direction," Reuters said. It plans to appeal the verdict and continues to deny that the active ingredient in Roundup, glyphosate, causes cancer.</p><p>Bayer's shares climbed 1.4% to $59.90 on the news, but are still down by more than a third in the past year.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Markets Insider</span></p><p class="caption">Bayer's stock has tanked.</p></div><p></p></div></div></p><p class="tagline"><a href="https://www.businessinsider.com/intelligence/future-of-fintech?IR=T&amp;itm_source=businessinsider&amp;itm_medium=ctgr_bii&amp;itm_term=ctgr_leadgen&amp;itm_content=finance&amp;itm_campaign=future-of-fintech-2"></a></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="https://www.businessinsider.com/300-million-world-cup-stadium-is-nearly-abandoned-2018-6">Brazil spent an estimated $300 million on a World Cup stadium that now sits nearly abandoned</a></h3>        <div>                    </div>    </div>

A judge just massively cut a $2 billion jury payout to a couple who claimed Bayer's Roundup weedkiller caused their cancer

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Will this 100-bagger agrichem stock deliver this season?

Katya Naidu

A judge just massively cut a $2 billion jury payout to a couple who claimed Bayer's Roundup weedkiller caused their cancer

Theron Mohamed

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