What is the story about?
Shares of UPL Ltd. will be in focus on Monday, February 23, after brokerage firm Nuvama Institutional Equities downgraded the stock to 'Hold'.
The brokerage cited the recent run-up in the stock price, unresolved leverage concerns and potential post-restructuring dilution as key reasons for the downgrade.
It has set a revised price target of ₹816 per share following the company's restructuring announcement.
Nuvama said that UPL has unveiled a group reorganisation to create a unified crop protection platform by merging UPL SAS and UPL Corp. The combined entity will be listed as UPL Global, while UPL Ltd. will continue as the holding company for the formulations business, R&D, SUPERFORM and Advanta.
According to Nuvama, the demerger is aimed at driving operational synergies and enabling value unlocking. It added that the transaction is cash and tax neutral, safeguards minority shareholder interests and does not alter the capital structure.
There is also no material impact expected on the company's current leverage overhang.
UPL has approved a composite scheme of arrangement to consolidate its India and global crop protection businesses into a separately listed entity. The company said this would create the world's second-largest listed pure-play crop protection platform.
Under the proposed structure, two listed entities will emerge.
UPL will continue as a diversified agriculture and specialty chemicals company, while a new entity, UPL Global Sustainable Agri Solutions, will house the consolidated crop protection operations.
The restructuring will integrate UPL's domestic and international crop protection businesses under UPL Global, positioning it as a focused and integrated crop protection player with an independent management structure and greater flexibility to raise capital.
The transaction will be executed in three steps. First, UPL Sustainable Agri Solutions, which houses the India crop protection platform and in which UPL holds a 90.91% stake, will be amalgamated into UPL.
Second, the India crop protection business will be vertically demerged from UPL into UPL Global.
Third, UPL Crop Protection Holdings, through which UPL owns a 77.78% stake in its international crop protection business, will be amalgamated into UPL Global.
Upon completion, UPL Global will be listed on the stock exchanges as a dedicated crop protection platform spanning both Indian and international markets.
The restructuring remains subject to regulatory and other approvals and is expected to be completed within 12 to 15 months.
The brokerage cited the recent run-up in the stock price, unresolved leverage concerns and potential post-restructuring dilution as key reasons for the downgrade.
It has set a revised price target of ₹816 per share following the company's restructuring announcement.
Nuvama said that UPL has unveiled a group reorganisation to create a unified crop protection platform by merging UPL SAS and UPL Corp. The combined entity will be listed as UPL Global, while UPL Ltd. will continue as the holding company for the formulations business, R&D, SUPERFORM and Advanta.
According to Nuvama, the demerger is aimed at driving operational synergies and enabling value unlocking. It added that the transaction is cash and tax neutral, safeguards minority shareholder interests and does not alter the capital structure.
There is also no material impact expected on the company's current leverage overhang.
UPL has approved a composite scheme of arrangement to consolidate its India and global crop protection businesses into a separately listed entity. The company said this would create the world's second-largest listed pure-play crop protection platform.
Under the proposed structure, two listed entities will emerge.
UPL will continue as a diversified agriculture and specialty chemicals company, while a new entity, UPL Global Sustainable Agri Solutions, will house the consolidated crop protection operations.
The restructuring will integrate UPL's domestic and international crop protection businesses under UPL Global, positioning it as a focused and integrated crop protection player with an independent management structure and greater flexibility to raise capital.
The transaction will be executed in three steps. First, UPL Sustainable Agri Solutions, which houses the India crop protection platform and in which UPL holds a 90.91% stake, will be amalgamated into UPL.
Second, the India crop protection business will be vertically demerged from UPL into UPL Global.
Third, UPL Crop Protection Holdings, through which UPL owns a 77.78% stake in its international crop protection business, will be amalgamated into UPL Global.
Upon completion, UPL Global will be listed on the stock exchanges as a dedicated crop protection platform spanning both Indian and international markets.
The restructuring remains subject to regulatory and other approvals and is expected to be completed within 12 to 15 months.
