UPL Ltd shares jump 7% despite Q2 net loss; increased volume results in increased revenue

UPL Ltd gains 7% despite price pressures; reports 4% Q2 revenue growth UPL Ltd saw its share price rise over 7% in early trade on Tuesday, touching an intraday high of Rs. 552.70, after the company released its Q2 results on Monday. Despite challenges such as price declines, UPL reported strong volume-driven growth during the quarter. The stock opened at Rs 520.05 on the BSE, slightly up from the previous day’s close of Rs.515.10, before moving higher.

In Q2, UPL’s revenue increased 4 percent year-on-year, to Rs. 7,676 million. The company saw a 13 percent increase in volumes, although this was offset by an 8 percent drop in prices. Growth has been largely driven by a focus on gaining market share, particularly in its key markets of Brazil, Europe and North America.

Notably, UPL fungicide volumes, especially mancozeb in Brazil, saw strong performance, while herbicide volumes in Argentina and North America were affected. Additionally, prices of active pesticide ingredients in Brazil faced erosion, although this was partially offset by volume growth in North America.

Despite positive volume growth, UPL’s contribution margin was reduced due to pricing pressure, particularly in Latin America (LATAM), and an unfavorable product mix in Europe. The company’s Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) for the quarter stood at Rs 745 crore, a decline of 9 percent compared to the previous year.

More worrisome, however, is UPL’s net loss of Rs 443 million for the quarter, reflecting the challenges the company has faced amid pricing pressure and margin contraction.

In summary, while UPL’s volume growth in key markets and focus on increasing market share were commendable, pricing pressure in a few regions and lower margins impacted profitability.