In today’s briefing:
- UPL Limited – Tear Sheet – Lucror Analytics
- Navi Technologies Pre-IPO – The Positives – Sold the First for US$20bn, Now Building One Without VCs
- Pick of the week – HUL
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 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.
Navi Technologies Pre-IPO – The Positives – Sold the First for US$20bn, Now Building One Without VCs
- Navi Technologies (NT) aims to raise around US$500m in its India listing. NT was started by Sachin Bansal, co-founder of Flipkart which was sold to Walmart in 2018.
- NT is a technology-driven financial products and services company. The company was only incorporated in 2018, it offers personal loans, home loans, general insurance and mutual funds.
- In this note, we will talk about the positive aspects of the deal.
Pick of the week – HUL
- HUL, the largest FMCG player in India, was formed by merging three subsidiaries of Unilever in 1956.
- HUL’s portfolio of products covers a wide spectrum including soaps, detergents, skin creams, shampoos, toothpastes, tea, coffee, packaged foods and branded atta
- Powerful brands and an envious distribution network are its primary strengths
Before it’s here, it’s on Smartkarma
