UPL reported a decent set of Q1FY22 numbers. Margins expanded by 20 basis points (bps) but was lower-than-expected due to higher fixed costs. Jaidev Shroff, the Global CEO of UPL, discussed the earnings and the outlook, going ahead.
UPL is a global business. The company has seen a huge cost increase in the freight charges and there has been a lot of price increase in raw material cost.
“Weather also has been challenging across the world, particularly in the high margin markets of Europe, there were some weather difficulties in Mexico where UPL is a market leader. So, it has been a challenging quarter but we are very pleased with the performance of our team. We expect a better-than-normal year going forward,” he said.
He believes cost prices will stabilise or go down. “We are also seeing some prices correcting on some of the raw materials. So we are quite comfortable with the year, going forward and we believe UPL will again be a market leader in growth across the world,” he added.
“We feel that it should be a better-than-normal, high-growth year for us. So, we expect revenue growth of 8-10 percent, EBITDA margin growth of at least 15 percent. So we are quite comfortable with the forecasts or estimates which we have given to the market,” he mentioned.
In terms of NPP business, Shroff stated, “UPL was incubating a lot of biological and the organic portfolio in our business. We have reclassified it and put it under one platform within the UPL structure and called it NPP where we are launching a lot products. Just in India we will be launching 26 products in a next year or so in this portfolio. Across the world we are seeing huge acceptance to the portfolio.”
Shroff expects this sector to grow much faster than the regular chemical business or at least double that. “We expect in the next five years, this business to be a much more substantial part of our revenues,” he shared.
For the full interview, watch the accompanying video.