Why Did UPL Shares Crash 13% Today?

Synopsis: UPL shares plunged 13% after announcing a major restructuring and facing a downgrade from Nuvama to ‘Hold’. While the move aims to create a pure-play global crop protection platform, concerns over leverage, potential dilution, valuation, and weak profit performance triggered sharp investor selling.

The shares of this company, which is principally engaged in the business of agrochemicals, industrial chemicals, chemical intermediates, speciality chemicals and the production and sale of field crops and vegetable seeds, crashed today after the company announced the restructuring, and Nuvama gave a hold rating on the stock.

With a market cap of Rs 57,116 crore, the shares of UPL Ltd crashed 13% in today’s trading session and reached a low of Rs 650. 4. When compared to its previous day’s closing price of Rs 751.75, the shares are trading at a PE of 30.1 compared to its industry PE of 29.6.

About the Restructuring 

UPL has announced a significant group restructuring. The restructuring involves the amalgamation of UPL SAS into UPL, followed by the demerger of the India crop protection business into UPL Global and the merger of UPL Cayman (the international crop protection arm) into UPL Global, where two listed companies will be formed. The current UPL Ltd will continue to be a diversified agriculture and specialty chemicals business, while a new company, UPL Global Sustainable Agri Solutions, will be formed to consolidate the crop protection business. 

The restructuring plan is expected to unlock a focused, pure-play global crop protection platform by carving out and consolidating UPL’s India and global crop protection businesses into a newly listed entity, UPL Global. This is expected to unlock shareholder value, simplify the group structure, and offer a clear strategic focus with an independent management structure. As a dedicated and integrated crop protection business in the Indian and global geography, UPL Global is expected to offer greater operational flexibility and improved access to capital markets, potentially emerging as the world’s second-largest pure-play listed crop protection platform, subject to approvals in 12-15 months.

The deal will be implemented in three phases. First, UPL Sustainable Agri Solutions (which holds the India crop protection platform) will be amalgamated into UPL. Second, the India crop protection business will be vertically demerged into UPL Global. Third, UPL Crop Protection Holdings (which holds UPL’s international crop protection business) will be amalgamated into UPL Global. The whole exercise is pending regulatory approvals and is expected to be completed in 12-15 months.

Nuvama on UPL

Despite the strategic merits, UPL’s shares fell by as much as 10% following brokerage Nuvama Institutional Equities’ downgrade of the stock to ‘Hold’. The broking house pointed to the recent sharp appreciation in the stock price, unresolved leverage issues, and possible dilution of equity following the restructuring as the key reasons for its caution. It adjusted its target price to Rs 816 per share in the wake of the announcement.

Although Nuvama recognised that the demerger might help unlock operational synergies and facilitate value unlocking, it pointed to the fact that the deal is cash and tax neutral with no immediate implications for the capital structure. However, it believes that the restructuring euphoria is already factored into the stock price. The negative action is a function of concerns over valuation rather than a lack of acceptance of the strategic rationale, and it implies that the near-term potential for upside is likely to be constrained until the leverage and execution visibility improve.

The revenue from operations for the company stood at Rs 12,269 crores in Q3 FY26 compared to Q3 FY25 revenue of Rs 10,907 crores, up by about 12 per cent YoY. However, the net profit stood at Rs 490 crore in Q3 FY26, down compared to the Rs 853 crore profit in Q3 FY25.

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