Summary
UPL Limited - Q3 FY26 Earnings Call Summary Monday, February 02, 2026 4:00 PM
Event Participants
Executives 7 Anurag Gupta, Bhupen Dubey, Bikash Prasad, Mike Frank, Raj Tiwari, Ravishankar Cherukuri, Toshan Tamhane
Analysts 4 Dhaval Shah, Imtiaz, Saurabh Jain, Tarang
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹12,269 crores | +12% YoY; driven by 8% volume growth, favorable exchange impact, partially offset by pricing pressure. |
| Contribution | ₹5,227 crores | +17% YoY; margin expanded 160 bps to 43% due to improved product mix and lower input costs. |
| EBITDA | ₹2,434 crores | +13% YoY; maintained 20% margin despite ₹2,792 crores SG&A spend (up 21% YoY). |
| Operating PATMI | ₹452 crores | +45% YoY (adjusted); driven by operational growth and lower finance costs. |
| Net Finance Cost | ₹639 crores | -9% YoY; benefited from debt prepayment, lower SOFR (-70 bps), and rating upgrades. |
| Net Working Capital | 116 Days | +9 days YoY; elevated due to inventory stocking (up 18 days) for expected Q4 peak sales. |
| Net Debt | ₹23,317 crores | Reduced by $427 million YoY; Net Debt/EBITDA improved to 2.5x from 3.8x. |
| Gross NPA (ECL) | $5 million | Credit loss provisioning in Q3 due to liquidity stress on retailers in Latin America. |
Geographic & Segment Commentary
- UPL Corp (Global Crop Protection): Revenue grew 8% YoY with contribution margins expanding 200 bps to 37.7%. Performance was led by herbicides and fungicides (Mancozeb), though insecticide pricing erosion in Brazil (Sperto®) remains a headwind.
- Advanta (Seeds): Growth of 22% in revenue and EBITDA, fueled by 14% volume expansion. Strong performance was noted in field corn (India/LATAM/SEA), grain sorghum (Brazil), and canola (Australia).
- UPL SAS (India CP): Revenue grew 4% YoY with a significant 800 bps expansion in contribution margin. This turnaround was driven by a sharper focus on business hygiene, improved product mix, and lower sales returns.
- SUPERFORM (Specialty Chemicals): Revenue declined 11% due to lower input costs and phasing, but specialty business grew 42%. Specialty share rose to 27% (from 18%), improving EBITDA margins by 120 bps.
- Regional Performance: Rest of World grew 32% (Africa/China), Europe grew 21% (Herbicides/NPP), and North America grew 3% despite $30 million in sales being postponed due to tariff uncertainties.
Company-Specific & Strategic Commentary
- Advanta IPO: Filed DRHP on Jan 19, 2026, for an Offer for Sale (UPL 7.8%, KKR 2.2%). Purpose is group deleveraging and value unlocking for the seeds platform, which has distinct capital needs from crop protection.
- Tariff Strategy: Management postponed $30 million in sales to Q4 hoping for tariff relief. Strategies include using bonded warehouses and shifting from importing formulated products to technical grade to seek exemptions.
- Sustainability Leadership: Ranked #1 globally in DJSI (score 77) and achieved CDP A rating for climate.
- Manufacturing Excellence: Shift toward high-margin specialty chemicals in SUPERFORM and cost-optimization initiatives helped offset technical-grade price corrections.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 4% to 8% (FY26) | Backed by strong 9M momentum and anticipated volume-led Q4 across all regions. |
| EBITDA Growth | 12% to 16% (FY26) | Target supported by improved contribution margins and cost-efficiencies. |
| Net Working Capital | ~70 Days (March 2026) | Expected sharp reduction in Q4 through seasonal cash release and inventory liquidation. |
| Net Debt/EBITDA | 1.6x to 1.8x (March 2026) | Target leverage reduction from 2.1x (opening FY26) through operational cash flow and IPO proceeds. |
Risks & Constraints
| Risk | Context |
|---|---|
| Tariff Volatility | U.S. tariffs remain at 50% for non-exempt products; management expects a potential $30M net impact in Q4 if not offset by pricing/supply chain shifts. |
| Pricing Pressure | Persistent overcapacity in China and low commodity prices for growers continue to pressure margins in post-patent molecules, especially in Brazil insecticides. |
| Liquidity Stress | Retailer and distributor liquidity stress in Latin America led to $5 million in ECL provisions this quarter; management is monitoring credit terms closely. |
Q&A Highlights
Tariff Management & North America
- Question: What is the behavior of the U.S. dealer network amid tariff confusion? (Saurabh Jain)
- Answer: Record high prepayments (up 25% YoY) indicate strong dealer confidence; $30 million in sales were pushed from Q3 to Q4 to manage tariff impacts (Mike Frank).
Advanta Strategic Rationale
- Question: Why list Advanta if it is already cash surplus? (Tarang)
- Answer: Primarily a deleveraging exercise for UPL via OFS; provides a value-unlock path for KKR and recognizes the distinct business cycles of Seeds vs. Crop Protection (Toshan Tamhane, Bikash Prasad).
Debt Maturity & Cash Flow
- Question: How will the $500M March and $400M September maturities be funded? (Imtiaz)
- Answer: March maturity covered by $570M opening cash plus Q4 seasonal cash release of $700-800M; September maturity to be met via operational cash generation and $1.7B in unutilized lines (Bikash Prasad).
Pricing Dynamics
- Question: Is technical-grade pricing finally stabilizing? (Tarang)
- Answer: Post-patent pricing has been stable for 6-9 months; however, differentiated products like Sperto® in Brazil still face intense competitive pricing pressure (Mike Frank).
Key Takeaway
UPL Limited delivered a record Q3 FY26, with revenue growing 12% to ₹12,269 crores and EBITDA increasing 13% to ₹2,434 crores. Performance was underpinned by broad-based volume growth (8%) and significant margin expansion in the India (800 bps) and Seeds (Advanta) segments. The company is aggressively pursuing deleveraging, evidenced by a reduction in Net Debt/EBITDA from 3.8x to 2.5x and the filing of the Advanta IPO. While U.S. tariff uncertainties and pricing pressures in Brazil insecticides persist, management remains confident in its FY26 guidance, targeting 12-16% EBITDA growth. Strategic shifts toward specialty chemicals and NPP BioSolutions are successfully offsetting commodity-grade volatility, positioning the company for a strong, cash-generative Q4 finish.
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