UPL Ltd, a generic crop protection, chemicals and seeds company, emerged as one of the top losers among the Nifty 50 stocks on Tuesday after global agrochemical firm Adama Ltd reported a decline in both revenue and profit for the quarter ended March 2023.

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On Tuesday, UPL shares dropped as much as 3.4 percent to hit an intraday low of Rs 705.30 on the National Stock Exchange (NSE). At 11:07 am, the stock was trading at Rs 716.95, down 1.8 percent, even as the Nifty rose 31.20 points, or 0.2 percent, to 17,774.60.

Adama Ltd, a global leader in crop protection, on Monday reported its financial results for the quarter ended March 2023. The company’s revenue during the quarter declined nearly 11 percent to $1,259 million, reflecting an increase of one percent in prices and a decrease of eight percent in volumes.

Adama’s gross profit fell to $310 million in the March quarter compared to $368 million in the same quarter last year. Gross margin also dropped to 24.6 percent compared to 25.9 percent in the year-ago quarter.

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The company said that decline in gross profit was due to the decline in sales, exchange rates and high-cost inventory. These impacts were slightly moderated by the improvement in the company’s sales mix of higher-margin products.

UPL investors took cues from Adama’s weak earnings, triggering a selloff in shares of the company. The fears could be backed by Antique Stock Broking’s forecast last week about UPL, where it had cut its target price on the stock while maintaining a ‘buy’ rating on concerns over moderation in the company’s growth.

Antique had cut its target price on UPL by nearly 15 percent to Rs 930 per share from Rs 1,090 earlier. The brokerage house had said that it expected UPL’s revenue and Ebitda (earnings before interest, tax, depreciation and amortisation) to grow at a slower-than-expected rate in the near term on the back of high channel inventory that impacts volume growth, and pricing pressure (especially in generic molecules) that affects realisation.

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(Edited by : Asmita Pant)