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Informist, Monday, May 11, 2026

By Eshitva Prakash and Gopika Balasubramanium 

MUMBAI – UPL Ltd. expects its capital expenditure to rise to $325 million to $350 million in 2026–27 (Apr-Mar), higher than the $261 million it incurred in FY26, the company's management said in a post-earnings conference call with analysts. "(The FY27 capex guidance is) not significantly higher (than in FY26), but we have some real good opportunity, which can enhance the margins and build additional EBITDA," the company's management said.

"Now we are much more comfortable with our debt level of gearing ratios that we have, we want to slightly add more capex (capital expenditure). We do see a lot of opportunity, especially in the speciality chemicals, the number of global players who are in discussions with us for long-term contracts, they want to source our capacity," the management said. 

The global chemical company's management said it will focus on using unutilised cash to prioritise deleveraging the company's balance sheet. Going forward, the company expects to keep its net debt-to-earnings before interest, tax, depreciation, and amortisation ratio below 1.5 times. The company exited FY26 with a net debt-to-EBITDA ratio of 1.6 times, down from 2.1 times in FY25. "We will use some of the cash flow generation for deleveraging also because from 1.6 we want to comfortably be within or less than 1.5 times," the company's management said.

The company officials also said that excess cash may be deployed for inorganic growth opportunities. "We are flooded with opportunities, you will know the number of companies and the players who are there in the market, but we have been extremely cautious about selecting those opportunities, and we will continue to do so if something comes on its own merit, (and) it looks very valuable, we will consider that," he said.  

The company's management declined to provide revenue and net profit guidance for FY27 and limited most of its forecasts to the June quarter. Uncertainty due to the war in West Asia and difficulty in predicting raw material costs are the reasons the company is not providing FY27 guidance, the company's management said. UPL took on a $300 million revolving credit facility in the March quarter to cushion itself against rising raw material prices. Additionally, it provisioned INR 3.50 billion for "doubtful debt," without which its EBITDA margin would have been 22% instead of 19.9% in the March quarter, and its EBITDA would have risen 22% on-year rather than 13%.

For the June quarter, the company expects its subsidiaries, Advanta and Superform, to see positive volume growth. UPL Corp.'s volume growth, meanwhile, will probably be unchanged year-on-year. "It is not the main season for them (UPL Corp.)," the company's management said. The management expects Superform's agrochemical business to grow 6-7% on-year in FY27, while revenue from its speciality business will rise by more than 20% in FY27. 

"Speciality (chemicals) is growing much faster than AG (agrochemical business)... and therefore, in the next 48 months we expect speciality chemicals will (have a contribution) of 40%-60% (in Superform's revenue), and that's when we feel that we should be able to touch 20% EBITDA for the business," the company's management said. Superform's margins expanded in the March quarter due to an increase in the contribution of speciality chemicals in its sales, they said. 

For the overall business, the company expects a positive foreign-exchange impact of 7–9% on its revenue in the June quarter due to the depreciation of the rupee. "On an EBITDA level, also, you could have a similar impact. So 6–7% of currency impact at the EBITDA level," UPL's management said.

Regarding its international operations, the company's management said it expects Latin American revenues to increase in FY27. "Growth was muted at the industry level last year in countries like Mexico, largely because of the tariffs that the Mexican farmers dealt with early in the year last year," a senior company official said. The tariff impact on Mexican farmers has normalised now, he added.

"We've got a variety of strategies that we're implementing across the (Latin America) region," the company said. "Of course, it's a multi-country region... and we have a strong position across the region. We continue to grow our business with co-ops. We will continue to grow our direct-to-farmer business, which is our original business," he said.

The company's management said it does not expect the Brazil joint venture company, Sinova, to be highly profitable, but that it was a strategic acquisition, and that the recent $87 million infusion to raise its stake in the JV will benefit UPL. "We make our margins when we supply our agri inputs to Sinova and the other global major player (with which UPL has a joint venture) that has a guaranteed offtake from the growers, and they make their own trading margins, so it's a win-win joint venture for both of us. "Sinova will make a distribution margin between 4-6%... last two years, the business has gone through some challenges, the company's management said.

For the quarter ended March, UPL reported a consolidated net profit of INR 10.61 billion on revenues of INR 183.35 billion. On Monday, the company's shares ended 3.6% higher at INR 669 on the National Stock Exchange. The company announced its results during market hours. End

US$1 = INR 95.31

Edited by Saji George Titus

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