UPL upgraded to 'Hold' rating as stock shows technical improvement and attractive valuation

UPL, a largecap company in the pesticides and agrochemicals industry, has recently been upgraded to a 'Hold' rating by MarketsMOJO. This upgrade comes as the stock has shown a technical improvement from a sideways trend to a mildly bullish range on November 19, 2024.
The stock has multiple factors that support its mildly bullish trend, including MACD, KST, and OBV. Additionally, with a ROCE of 2.8, the stock is currently trading at an attractive valuation with a 1.3 Enterprise value to Capital Employed. It is also trading at a discount compared to its average historical valuations.

However, the stock has faced challenges in the past year, with a return of -2.64% and a significant decrease in profits by -190.1%. The company also has a high Debt to EBITDA ratio of 3.61 times, indicating a low ability to service debt.

Furthermore, the company has shown poor long-term growth, with an annual rate of -0.58% in operating profit over the last 5 years. It has also declared negative results for the last 7 consecutive quarters, with a significant decrease in PBT and PAT. The operating cash flow has also been at its lowest at Rs 1,822.00 Cr.

In comparison to the market (BSE 500), UPL has underperformed in the last 1 year, generating negative returns of -2.64% while the market has generated returns of 24.46%. With high institutional holdings at 53.56%, these investors have better capability and resources to analyze the fundamentals of the company. Their stake has also increased by 1.29% over the previous quarter.

Overall, while UPL has shown some positive signs with its technical trend and attractive valuation, it also faces challenges in terms of debt and long-term growth. Investors may want to hold onto the stock for now and monitor its performance closely.