UPL Ltd (UPL) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day, and welcome to UPL Limited Q2 FY '27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Astitwa Chouhan. Thank you, and over to you, sir.
Astitwa Chouhan (UPL Ltd): Hello, good evening everyone. I am Astitwa Chouhan from UPL Investor Relations. On behalf of the UPL management team, thank you for joining us today to discuss our financial performance for the second quarter and first half of FY '27. The investor presentation, press release, and financial statements are available on our website, and we take it that you have read the safe harbor statements. From the management team, we have with us today, Vikash Mittal, Group Chief Financial Officer; Raj Tiwari, CEO, SPlatform, our manufacturing and specialty chemicals platform; Bhupen, CEO, Advanta, our seeds and post-harvest platform; Ravi Shankar Cherukuri, CEO of our India crop protection business. I would also like to introduce two new members of our senior management team who joined us today, Sameer Tandon, Regional President APAC, Africa, and Europe for UPL Corp.; and Ashish Dobhal, Regional President Americas for UPL Corp. On this call, Vikash will take us through the performance of UPL Limited and its each of its platforms for Q2 and H1 FY '27. We will now yeah, I hand it over to Vikash. Vikash, over to you.
Vikash Mittal (UPL Ltd): Thank you, Astitwa. Good evening everyone, and a very warm welcome to UPL second quarter and first half FY '27 earnings call. Thank you for taking the time to join us today. Before I turn to the numbers, I would like to express my appreciation for your continued engagement and constructive feedback. Your inputs continue to sharpen the quality, consistency, and clarity of our reporting, and several of the changes you will see in this quarter's presentation reflect that feedback. Thanks,
Moderator: Sorry to interrupt boardroom. Sir your audio is coming from a lot distance right now.
Vikash Mittal (UPL Ltd): To set the context for our business performance, it is important to highlight that this quarter tested the resilience of our model. Agricultural markets faced an exceptionally
Vikash Mittal (UPL Ltd): difficult season across key geographies, and we made a conscious choice not to compromise on quality of the business. I'm pleased to share that UPL delivered its eighth consecutive quarter of improvement in margins and EBITDA. EBITDA grew 5% in the quarter and 9% in the first half, with margins expanding by 120 and 80 basis points, respectively, despite higher input, freight, and energy costs. That, to us, is the strongest validation of our resilient business model and structural improvements in quality of the business in
Moderator: Sorry to interrupt, Bhaskar sir, your audio is still moderating. Just give me one moment. I'll just disconnect and reconnect this line. Ladies and gentlemen, please stay connected while we reconnect the management.
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Vikash Mittal (UPL Ltd): Yeah. So, just to set the context for our business performance, it is important to highlight that this quarter tested the resilience of our model. Agricultural markets faced an exceptionally difficult season across key geographies, and we made a conscious choice not to compromise on the quality of the business. I'm pleased to share that UPL delivered its eighth consecutive quarter of improvement in margins and EBITDA. EBITDA grew 5% in the quarter and 9% in the first half, with margins expanding by 120 and 80 basis points, respectively, despite higher input, freight, and energy costs. That, to us, is the strongest validation of our resilient business model and structural improvements in quality of business in the last few years. Equally important, our diversified and resilient core did what it is designed to do. Advanta's super-performance delivered a strong double-digit growth. UPL SAS continued to expand margins, and together, they cushioned a softer quarter in global crop protection, where volumes have partly been phased into the second half. Let me take you through the macro backdrop, a few corporate updates, our consolidated and platform-wise performance, the balance sheet, and our outlook for the rest of FY '27. To start with the macroeconomic overview, the second quarter played out against intense and persistent volatility. Geopolitical tensions, particularly in West Asia, kept freight, energy-linked inputs, and active ingredient costs elevated, while U.S. tariff-related uncertainties continued to weigh on trade flows. At the same time, generic supply and competitive intensity
Vikash Mittal (UPL Ltd): limited the industry's ability to pass these costs onto the market. Weather conditions added another layer of complexity. El Nino affected planting and application windows across several geographies. Europe went through a severe dry and hot summer and India saw a long dry spell through the Kharif season. In Brazil and the wider southern cone, tight channel liquidity and restricted credit led to cautious just in time purchasing that has pushed demand later into the season. However, encouraging signals are there. Crop commodity prices have recovered meaningfully, with soybean, wheat, corn, cotton up roughly between 25% to 35% over the last 12 months. Together with channel inventories that are broadly at normal levels, this sets the stage for a gradual improvement in grower sentiment and farm economics as we move into the second half. Before delving deeper into financial performance, I would like to share some key corporate updates for the quarter. First, Advanta, our seeds and post-harvest platform, has agreed to acquire 99.98% of Misr Hytech Seed International in Egypt for approximately $110 million, subject to the closing conditions. This strengthens Advanta's presence in field corn across Egypt and the wider Middle East and Africa regions. Second, on credit ratings, S&P revised the outlook on UPL Corp to positive from stable, affirming its BB rating, and CRISIL revised the outlook on UPL Limited to stable, affirming its AA+ and A1+ ratings. Both actions recognize the progress we have made on margins, growth, profitability, and the balance sheet strength, including deleveraging. On debt obligation of the $500 million term loan maturing in December 2026, we have refinanced $400 million to FY32 well ahead of the schedule. Now, coming to the performance for the quarter. We reported revenue of 11,860 crore, broadly stable at 1% lower than last year. Volumes declined by 10%, pricing was flat, and currency contributed a positive 9%. The decline was concentrated in global crop protection, while Advanta and SuperForm delivered a strong growth. For first half, revenue grew 4% to 22,041 crore, led by a strong growth of 18% in Advanta and 21% in SuperForm, which offset a 2% decline in UPL Corp. For the quarter, contribution grew 1% to 5,087 crore and contribution margin expanded 100 basis points to 42.9%, driven by a better product and platform mix, a strong brand equity, new product launches, geographical diversification, and strong global distribution capabilities, despite higher input and freight costs. For the first half, contribution grew a healthy 7%, with margins expanding a notable 140 basis points to 44%. SG&A in Q2 was 2% lower at 2,775 crore, led by operational excellence and cost optimization initiatives. As a result, EBITDA grew 5% to 2,312 crore, with margin up 120 basis points to a very solid 19.5%. For the first half, EBITDA increased by 9% to 3,812 crore, with margin expanding 80 basis points to 17.3%, despite a higher cost and uncertain environment. Moving down the P&L, our operational PATMI for the quarter was 422 crore, 11 crore ahead of last year, as the improvement in operating performance carried through to the bottom line. For the first half,
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