Buy United Phosphorus - EMkay

Reco: BUY
CMP: Rs 144
Target Price: Rs 200

Bottomline disappoints, downgrade estimates

- Q3FY12 revenues / EBITDA were above est driven by currency impact however higher tax outgo squeezed APAT at Rs 1.15bn,4% yoy, below est of Rs 1.5bn.

- 58%yoy growth in sales is primarily driven by recent acquisitions in Brazil (~25%) and exchange fluctuation (19%) while organic volume growth remains muted at ~6%.

- Despite higher revenue growth, EBITDA margins remain subdued at 18.1%. Higher tax rates at 33% and losses from Brazilian JV (SIPchem) suppressed PAT growth at mere 4%.

- Downgrade FY12/13 est by 10%/7% to Rs 16 / 19.9 and subsequently downgrade price target to Rs 200 (10xFY13 EPS), however maintain BUY due to attractive valuations.

Source : Equity Bulls

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