CLSA has retained its ‘buy’ recommendation on UPL shares with an unchanged target price of Rs 1,100.

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At 1354 IST, shares of UPL were up 0.4 percent at Rs 801.95 on BSE. The stock has been gaining for the last 10 days and has risen over 11 percent during the period. Intraday, the scrip gained about 2 percent on Friday.

“We see strong quarters ahead of UPL led by higher soft commodity prices, benefits of price increases taken in Aug-Sep 2021, and greater demand for UPL’s Glufosinate (herbicide) as Bayer’s Glyphosate faces supply issues,” CLSA said in a note to clients.

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The brokerage firm says that UPL should be able to comfortably exceed its revenue/EBITDA and debt repayment guidance for FY22 despite higher logistics costs from the recent spurt in commodity prices.

Further, UPL remains unaffected from the ongoing Russia-Ukraine War so far with no major supply chain disruptions, according to the brokerage firm.

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Russia and Ukraine contribute less than 2 percent to the company’s revenue. CLSA pointed out.

The brokerage firm has cut its EPS estimates by 1-3 percent for FY22-24 CL to bake in the assumption of higher logistics costs.

“The focus on differentiated and sustainable products that have potential to expand UPL’s EBITDA margins to 25 percent is a key PE rerating catalyst in the long-term,” CLSA said.

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