Neutral UPL Ltd for the Target Rs.730 by Motilal Oswal Financial Services Ltd
Value creation through simplification & pure-play separation
* UPL is undertaking a three-step restructuring to create UPL Global (UPL 2) as a unified India and international crop protection platform, positioning it as the world’s second-largest listed pure-play crop protection company. The plan involves merging UPL SAS into UPL Ltd, demerging the India Crop Protection business into UPL 2, and merging UPL Cayman into UPL 2, alongside Advanta’s IPO, consolidating its seeds and Decco businesses. UPL Ltd will remain the parent and capital allocator, with plans to enhance transparency and potentially eliminate the prevailing conglomerate discount to UPL.
* The group will operate through two separately listed verticals—Global Crop Protection and Seeds—each with distinct structural drivers. Crop protection remains volume-led and resilient, benefiting from diversified demand, biofueldriven acreage expansion, and expanding post-patent opportunities, with a balanced mix of post-patent and differentiated products supporting margins. Advanta, the high-RoCE (~25%) seeds platform, offers superior margins, strong cash flows, and IP-led growth, enabling both businesses to be valued independently in line with their return and capital intensity profiles.
* The restructuring simplifies the group into independently benchmarkable pure plays, improving transparency and strategic focus. UPL 2 becomes a focused global crop protection platform, while UPL 1 sharpens its manufacturing-led B2B positioning. The move also supports subsidiary-level capital raises, accelerates deleveraging, and strengthens the pathway to valuation re-rating.
* We expect UPL to report a CAGR of 8%/12%/37% in revenue/EBITDA/PAT over FY25-28. We reiterate our Neutral rating on the stock with a TP of INR730.
Simplification of business structure to unlock value
* UPL Ltd. (UPL 1) is undertaking a three-step restructuring to create UPL Global (UPL 2) as a unified India and international crop protection platform. This will position it as the world’s second-largest listed pure-play crop protection company.
* The transaction involves the 1) merger of UPL SAS into UPL 1, 2) demerger of the India Crop Protection (UPL SAS) business into UPL 2, and 3) merger of UPL Cayman (international Crop Protection platform) into UPL 2.
* While Advanta filed its DRHP in Jan’26, the proposed IPO will not only list the core seeds platform but also consolidate Decco, the post-harvest solutions business, under the same entity. This will create a unified sustainability-focused platform.
* Post restructuring, UPL 1 remains the operating parent, capital allocator, incubator of future businesses, and promoter of UPL 2 and Advanta.
* The restructuring will be executed simultaneously with no special rights to promoters or PE investors.
* With the promoter family abstaining from voting, the scheme is now subject to minority shareholders’ approval. Swap ratio to be 1 share of UPL 2 for 1 share of UPL 1. However, public shareholders will not receive 1:1 economic exposure in UPL 2 due to existing PE ownership at the platform level (PE ownership will be at ~16% in UPL 2, while minority shareholders will only receive ~12% stake)
* The entire restructuring scheme is designed to be cash flow neutral and tax neutral, with the existing credit ratings of the group expected to remain unchanged for all entities upon completion.
* India Crop Protection (India SAS) and Advanta will be net debt-free and cashflow positive platforms, while INR32b debt will reside in Superform (at UPL 1), and the majority of the remaining net debt will sit at the UPL Cayman International Crop Protection platform (at UPL 2).
* The valuation for the swap is based on a weighted approach incorporating the peer comparison method, DCF, and asset value, where the indicative value of UPL Cayman is USD5.3-5.5b and ~INR110b for India SAS.
* This simplified structure is expected to enhance transparency and potentially eliminate the prevailing conglomerate discount to UPL Ltd.
UPL Global and Advanta: Strong pure plays
* Going forward, there will be two structurally resilient, separately listed agribusiness verticals besides UPL Ltd. 1) Global Crop Protection and 2) Seed businesses.
* Management believes their crop protection business remains structurally stable, supported by a highly diversified customer base and consistent global volume growth, with rising multi-AI (active ingredient) usage increasing volume intensity per acre.
* Notably, as the biofuel production scales up, more acreage is diverted toward energy crops (such as corn and sugarcane), which increases overall cultivated area and input intensity, thereby structurally raising long-term demand for crop protection products.
* Rising global regulatory and compliance costs are limiting new patented AI launches, structurally expanding the post-patent opportunity where UPL 2 positions itself as a leading global player.
* Management targets a balanced portfolio mix (50% post-patent and 50% differentiated & sustainable products), with differentiated offerings delivering superior margins. Currently, ~15-20% of sales already come from unique multimolecule products, and ~80% of new launches carry higher margins.
* Advanta is positioned as one of the highest-quality platforms within the group (ninth largest seed company globally), delivering ~25% ROCE, ~23%+ EBITDA margins, strong positive cash flows, high capital efficiency, a global footprint, and a robust IP-led product portfolio.
* Seeds are structurally distinct from crop protection, driven by rising global food demand, hybridization in emerging markets, climate-adaptive genetics, and a regulatory push toward resilient crops, while being less exposed to active ingredient pricing volatility and carrying higher IP intensity and structurally superior margins.
* Both the seeds and post-harvest (via Decco) businesses are inherently aligned with long-term sustainability themes, while generating stable operating cash flows and operating with structurally lower leverage compared to the crop protection segment.
* With UPL Global and Advanta becoming independent pure plays, the group separates a mid-teen margin, volume-led crop protection business from a ~25% ROCE, ~23% EBITDA margin seeds platform, enabling each to be valued against its respective global peer set and potentially command multiples aligned with their return profile and capital intensity rather than a blended group valuation.
Assessing risk-reward across valuation scenarios
* In line with the proposed restructuring, we have assessed the potential impact on our TP under multiple scenarios. We derive UPL Limited’s valuation based on the comparable set of specialty chemical companies, while UPL Global and Advanta are valued in line with global crop protection and global seeds business peers, respectively.
* The average historical EV/EBITDA multiple for specialty chemical peers (SRF, Privi Speciality Chemicals, etc.) stands at ~25x. Apply a ~35% discount to the benchmark, and we value UPL Ltd. at 16x FY28E EV/EBITDA.
* The average historical EV/EBITDA multiple for global crop protection peers (including FMC, Corteva, and BASF) stands at ~16x. Applying a 38% discount to this benchmark, we value UPL Global at 10x FY28E EV/EBITDA. Similarly, the average historical EV/EBITDA for seed companies (including Kaveri Seeds and Sakata Seeds) is ~22x. We apply a 30% discount to this multiple, valuing Advanta at 15x FY28E EV/EBITDA.
* We have discounted our multiples as compared to respective peers due to the following reasons: Kaveri Seed Company/ Sakata Seed Corporation remain largely domesticfocused/ innovators. Similarly, global crop protection majors follow innovationled models supported by sustained R&D intensity and differentiated product pipelines. In specialty chemicals, leadership is reinforced across high-value intermediates and active ingredient (AI) segments.
* Given the uncertainty around the eventual hold-co discount, we have constructed multiple scenarios to illustrate its impact on valuation.
* Under Scenario 1 (Hold-co discount at 20%), we value UPL Limited/UPL Global/Advanta at 16x/10x/15x FY28E EBITDA, respectively, while applying a 20% holding company discount to UPL Global and Advanta. This implies a 20% upside to the current market price. ? Under Scenario 2 (Hold-co discount at 30%), this is expected to result in an upside of 10% against the current market price.
* Under Scenario 3 (Hold-co discount at 40%), this is expected to result in an upside of 1% against the current market price.
* Under Scenario 4 (Hold-co discount at 50%), this is expected to result in a downside of 9% against the current market price.
* Our scenario analysis indicates that UPL’s valuation is highly sensitive to the holding company discount applied to UPL Global/Advanta. Thus, the riskreward remains favorable if the Holdco discount moderates but becomes constrained under higher discount assumptions.
Valuation and view
* We believe the restructuring is a strategically positive move, as it simplifies the group structure and separates distinct earnings engines into independently benchmarkable pure plays.
* UPL 2, as a pure-play crop protection company with global scale, customer reach, and an improving margin mix, can now be benchmarked against international agchem peers, which could support value unlocking.
* UPL 1, positioned as a manufacturing-led B2B entity with strong domestic and export formulation capabilities, can sharpen its focus on agrochemical active ingredients, contract manufacturing, and diversification into new growth verticals without being constrained by the capital intensity of the global CP platform.
* The restructuring strengthens the group’s deleveraging roadmap, as independent platforms allow capital raises at the subsidiary level (Advanta IPO,potential Superform monetization) while preserving consolidated cash flows and accelerating progress toward the 1.2-1.5x mid-term net debt/EBITDA target.
* Dedicated business leadership and platform-level accountability should improve operational focus, margin discipline, and capital allocation efficiency, reducing cross-subsidization between businesses.
* Moreover, given that effective public shareholding (excluding PE) in UPL 2 is relatively limited (~12%), the incremental upside for minority shareholders is more meaningfully driven by 1) Superform monetization and compressing the holding company discount at UPL 1, and 2) Advanta’s IPO, where minority shareholders will have a higher stake (effective shareholding of ~43% in Advanta and ~66% in Superform). Thereby, minority shareholders are expected to unlock higher value through these companies.
* Overall, the simplification separates growth drivers, improves transparency, aligns management incentives at the platform level, and creates a clearer pathway for sustainable growth across the entity.
* We expect UPL to report a CAGR of 8%/12%/37% in revenue/EBITDA/PAT over FY25-28. Considering the uncertainty in the Holdco discount, as UPL Ltd. is bound to become a holding company, we reiterate our Neutral rating on the stock with a TP of INR730.
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