Senior Credit Analyst, Lucror Analytics

Trung Nguyen

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable). We view UPL Limited's ESG as "Adequate", in line with the Environmental and Governance scores. However, the company's Social pillar is "Weak". Controversies are "Material" and Disclosure is "Adequate".

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).  We view UPL Limited's ESG as "Adequate", in line with the Environmental and Governance scores. However, the company's Social pillar is "Weak". Controversies are "Material" and Disclosure is "Adequate".  

UPL Limited - ESG Report - Lucror Analytics

Credit

We view UPL Limited as “Low Risk” on the LARA scale, mainly due to the company’s robust business profile. UPL has global scale, being the fifth-largest generic agrochemical company in the world and the largest player in the post-patent segment. The industry enjoys reasonable pricing power and profitability due to the high barriers to entry, namely: [1] regulations; [2] the years-long registration process; and [3] the sales and distribution network. Geographical exposure is diversified, with 40% of UPL's 9M/21-22 revenues derived from LatAm, 14% each from North America and Europe, 17% from Rest of the World and 14% from India, which accounts for 40-50% of total volume production. Thus, the company's ratings are not limited by India’s sovereign rating. On the flip side, the credit profile is weighed down by: [1] UPL's seemingly aggressive financial policies and appetite, as seen in the USD 4.2 bn acquisition of Arysta LifeScience in 2019; and [2] the below-par financial metrics for the BBB ratings, albeit these are improving rapidly. There is event risk from either another potential major acquisition or UPL's buyout of TPG and ADIA's stakes (11% each) in subsidiary UPL Corp, which would increase leverage. Our Credit Bias on UPL is “Stable”, as the robust business profile, strong FCF generation and improving financial metrics should help the company weather the volatile environment stemming from the Russia-Ukraine war.

 We view UPL Limited as “Low Risk” on the LARA scale, mainly due to the company’s robust business profile. UPL has global scale, being the fifth-largest generic agrochemical company in the world and the largest player in the post-patent segment. The industry enjoys reasonable pricing power and profitability due to the high barriers to entry, namely: [1] regulations; [2] the years-long registration process; and [3] the sales and distribution network. Geographical exposure is diversified, with 40% of UPL's 9M/21-22 revenues derived from LatAm, 14% each from North America and Europe, 17% from Rest of the World and 14% from India, which accounts for 40-50% of total volume production. Thus, the company's ratings are not limited by India’s sovereign rating.  On the flip side, the credit profile is weighed down by: [1] UPL's seemingly aggressive financial policies and appetite, as seen in the USD 4.2 bn acquisition of Arysta LifeScience in 2019; and [2] the below-par financial metrics for the BBB ratings, albeit these are improving rapidly. There is event risk from either another potential major acquisition or UPL's buyout of TPG and ADIA's stakes (11% each) in subsidiary UPL Corp, which would increase leverage.  Our Credit Bias on UPL is “Stable”, as the robust business profile, strong FCF generation and improving financial metrics should help the company weather the volatile environment stemming from the Russia-Ukraine war.

UPL Limited - Tear Sheet - Lucror Analytics

External broker reports(aggregated public sources), Edelweiss Broking Limited

Edelweiss

External broker reports(aggregated public sources)

Edelweiss Broking Limited

Edelweiss Broking Limited is an Indian Financial services company based in Mumbai, India. The company is a subsidiary of Edelweiss Group. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

Equity Bottom-Up

<ul><li>UPL, incorporated in 1969, is a global player in the agro-chemicals industry with strong presence in off-patent market of US and Europe</li><li>UPL is a direct proxy for increase in demand for food crops due to rising commodity prices, high population growth and high demand for bio-fuel</li><li>The recent acquisition of Arysta, will further increase UPL’s global scale and make it the 5th largest agrochemical player globally</li></ul><div class="content-highlight">Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</div>

UPL, incorporated in 1969, is a global player in the agro-chemicals industry with strong presence in off-patent market of US and EuropeUPL is a direct proxy for increase in demand for food crops due to rising commodity prices, high population growth and high demand for bio-fuelThe recent acquisition of Arysta, will further increase UPL’s global scale and make it the 5th largest agrochemical player globallyContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Shanghai Shenzhen CSI 300 Index / Technical Analysis

Global equities (MSCI ACWI, ACWI ex-US, and EAFE) remain bullish with their uptrends intact, and the MSCI Emerging Markets index continues to hold above major support at $52 on the EEM-US. Additionally, Europe’s STOXX 50 and Hong Kong’s Hang Seng are on the cusp of short-term breakouts, while the major indexes in China (Shanghai Composite &amp; CSI 300) are currently breaking above short-term resistance... see chart below. Considering the absence of breakdowns and the fact that market dynamics remain largely positive, our overall constructive outlook remains appropriate.

Global equities (MSCI ACWI, ACWI ex-US, and EAFE) remain bullish with their uptrends intact, and the MSCI Emerging Markets index continues to hold above major support at $52 on the EEM-US. Additionally, Europe’s STOXX 50 and Hong Kong’s Hang Seng are on the cusp of short-term breakouts, while the major indexes in China (Shanghai Composite &amp; CSI 300) are currently breaking above short-term resistance... see chart below. Considering the absence of breakdowns and the fact that market dynamics remain largely positive, our overall constructive outlook remains appropriate.

Chinese Indexes Headed Higher; Actionable Themes: Transportation, Materials, and Services

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

The <a href="https://www.smartkarma.com/entities/nifty-index" target="_blank" data-smartkarma-citation="entities:23617:1" rel="noopener">NIFTY Index (NIFTY INDEX)</a> is the flagship index of the National Stock Exchange of India (NSE). The index has 50 stocks and is a free float weighted market cap index. The next rebalance will be effective after the close of trading on 29 September 2021 and the announcement of the changes will be made four weeks prior to the effective date.More than a third of the way through the review period that runs from February to July, we see one possible change to the index with <a href="https://www.smartkarma.com/entities/info-edge-india-ltd" target="_blank" data-smartkarma-citation="entities:14461:1" rel="noopener">Info Edge India (INFOE IN)</a> replacing <a href="https://www.smartkarma.com/entities/indian-oil-corp-ltd" target="_blank" data-smartkarma-citation="entities:7781:1" rel="noopener">Indian Oil Corp (IOCL IN)</a>. There could be more changes if some large stocks like <a href="https://www.smartkarma.com/entities/adani-green-energy-ltd" target="_blank" data-smartkarma-citation="entities:29012:1" rel="noopener">Adani Green Energy Ltd (ADANIGR IN)</a> and <a href="https://www.smartkarma.com/entities/dmart" target="_blank" data-smartkarma-citation="entities:23656:1" rel="noopener">Avenue Supermarts Ltd (DMART IN)</a> are included in the Futures &amp; Options (F&amp;O) segment of the market.<a href="https://www.smartkarma.com/entities/vedanta-ltd" target="_blank" data-smartkarma-citation="entities:514:1" rel="noopener">Vedanta Ltd (VEDL IN)</a> does not make the cut for index inclusion following the 10% reduction in its free float following the open offer.Passive funds benchmarked to the <a href="https://www.smartkarma.com/entities/nifty-index" target="_blank" data-smartkarma-citation="entities:23617:1" rel="noopener">NIFTY Index (NIFTY INDEX)</a> will need to trade around 3 days of ADV on <a href="https://www.smartkarma.com/entities/info-edge-india-ltd" target="_blank" data-smartkarma-citation="entities:14461:1" rel="noopener">Info Edge India (INFOE IN)</a> and <a href="https://www.smartkarma.com/entities/indian-oil-corp-ltd" target="_blank" data-smartkarma-citation="entities:7781:1" rel="noopener">Indian Oil Corp (IOCL IN)</a>. Plus there will be flow from active funds and from cash and carry baskets on the index.<a href="https://www.smartkarma.com/entities/info-edge-india-ltd" target="_blank" data-smartkarma-citation="entities:14461:1" rel="noopener">Info Edge India (INFOE IN)</a> trades at a valuation premium to its regional peers, while <a href="https://www.smartkarma.com/entities/indian-oil-corp-ltd" target="_blank" data-smartkarma-citation="entities:7781:1" rel="noopener">Indian Oil Corp (IOCL IN)</a> trades at a discount to its domestic peers.The big event to watch for is the potential inclusion of <a href="https://www.smartkarma.com/entities/adani-green-energy-ltd" target="_blank" data-smartkarma-citation="entities:29012:1" rel="noopener">Adani Green Energy Ltd (ADANIGR IN)</a> and <a href="https://www.smartkarma.com/entities/dmart" target="_blank" data-smartkarma-citation="entities:23656:1" rel="noopener">Avenue Supermarts Ltd (DMART IN)</a> in the F&amp;O segment that will open the door for index inclusion.

The NIFTY Index (NIFTY INDEX) is the flagship index of the National Stock Exchange of India (NSE). The index has 50 stocks and is a free float weighted market cap index. The next rebalance will be effective after the close of trading on 29 September 2021 and the announcement of the changes will be made four weeks prior to the effective date.More than a third of the way through the review period that runs from February to July, we see one possible change to the index with Info Edge India (INFOE IN) replacing Indian Oil Corp (IOCL IN). There could be more changes if some large stocks like Adani Green Energy Ltd (ADANIGR IN) and Avenue Supermarts Ltd (DMART IN) are included in the Futures &amp; Options (F&amp;O) segment of the market.Vedanta Ltd (VEDL IN) does not make the cut for index inclusion following the 10% reduction in its free float following the open offer.Passive funds benchmarked to the NIFTY Index (NIFTY INDEX) will need to trade around 3 days of ADV on Info Edge India (INFOE IN) and Indian Oil Corp (IOCL IN). Plus there will be flow from active funds and from cash and carry baskets on the index.Info Edge India (INFOE IN) trades at a valuation premium to its regional peers, while Indian Oil Corp (IOCL IN) trades at a discount to its domestic peers.The big event to watch for is the potential inclusion of Adani Green Energy Ltd (ADANIGR IN) and Avenue Supermarts Ltd (DMART IN) in the F&amp;O segment that will open the door for index inclusion.

NIFTY50 Index Rebalance Preview: Info Edge Could Replace IOC

India

UPL Ltd. manufactures, distributes and exports off-patent agrochemicals. The Company also manufactures phosphorus & phosphorus-based compounds and its products include herbicides, fungicides, insecticides, fumigants and rodenticides. United Phosphorus also manufactures industrial chemicals, specialty chemicals and chloralkaline products

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UPL Ltd (UPLL IN)

UPL Limited - ESG Report - Lucror Analytics

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable). We view UPL Limited's ESG as...

Lucror Analytics

UPL Limited - Tear Sheet - Lucror Analytics

We view UPL Limited as “Low Risk” on the LARA scale, mainly due to the company’s robust business profile. UPL has global scale, being the...

Lucror Analytics

Pick of the Week: UPL Limited

UPL, incorporated in 1969, is a global player in the agro-chemicals industry with strong presence in off-patent market of US and Europe

Edelweiss

Chinese Indexes Headed Higher; Actionable Themes: Transportation, Materials, and Services

The evidence continues to suggest that value remains leadership and we recommend adding exposure to cyclical value on this minor pullback in the...

Vermilion Research

NIFTY50 Index Rebalance Preview: Info Edge Could Replace IOC

We see one potential changes to the NIFTY50 index at the September review. Adani Green and Avenue Supermarts could join the index if listed F&O are...

Brian Freitas

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