Geojit Investments has reiterated an ACCUMULATE rating on UPL Ltd with a revised target price of Rs 879, reflecting renewed confidence in the company’s earnings recovery and operational turnaround. A sharp rebound in volumes, margin expansion driven by a favourable product mix, and lower raw material costs marked a decisive shift in performance during Q2FY26. After navigating a prolonged downcycle marked by channel destocking and pricing pressure, UPL is now entering the second half of FY26 with stabilised demand, healthier inventories, and improving cost competitiveness. With growth momentum visible across geographies and platforms, the stock offers a balanced risk-reward profile for medium-term investors.

Geojit Reiterates ACCUMULATE With Target of Rs 879

Geojit has maintained its ACCUMULATE recommendation on UPL Ltd, setting a target price of Rs 879, implying a potential upside of around 13% from the current market price of Rs 781. The valuation is based on 21x FY27E adjusted EPS, reflecting improving earnings visibility and a return to profitability after a challenging FY25.

The brokerage highlights that UPL’s performance recovery is now being driven by alignment across platforms, product mix improvement, and disciplined cost management—factors that were absent during the earlier phase of earnings stress.

Q2FY26 Marks a Clear Earnings Inflection

• Revenue growth driven by volume recovery.
UPL reported consolidated revenue of Rs 12,019 crore in Q2FY26, registering an 8.4% year-on-year increase. Volume growth of 7% formed the backbone of this performance, led by a sharp recovery in North America and supported by Latin America, while currency movements contributed an additional 3%.

• EBITDA surge signals margin normalisation.
EBITDA jumped 40% YoY to Rs 2,205 crore, with margins expanding sharply by 410 basis points to 18.3%. This improvement reflects a combination of higher volumes, an accretive product mix, and easing raw material costs.

• Return to profitability strengthens confidence.
The company reported a profit after tax of Rs 612 crore in Q2FY26, compared with a loss of Rs 585 crore in the same quarter last year. Lower finance costs, controlled SG&A expenses, and reduced foreign exchange losses were key contributors.

Agro Business Remains the Core Growth Engine

• Agro segment drives topline momentum.
The agro segment accounted for the bulk of revenue, rising 8% YoY to Rs 11,412 crore. Growth was broad-based, supported by Global Crop Protection and Advanta platforms.

• Non-agro business adds diversification.
Non-agro revenues increased 9.3% YoY to Rs 655 crore, reflecting growing traction in speciality and industrial chemicals. Geojit views this diversification as a structural positive, reducing cyclicality over the medium term.

• Product mix continues to improve.
Management highlighted sustained traction in herbicides and fungicides, which command superior margins and support profitability even in a flat pricing environment.

Geographic Recovery Broadens the Growth Base

• North America leads the rebound.
North America posted a robust 79% YoY increase in revenue during Q2FY26, marking a strong turnaround after inventory-led weakness in prior quarters.

• Latin America maintains steady momentum.
Latin America reported a 10% YoY growth, aided by strong demand and favourable product performance.

• Europe stabilises after a volatile period.
European revenues declined marginally by 1% YoY, largely due to the normalisation of fungicide sales following an unusually strong prior-year season. Geojit expects stability to return in subsequent quarters.

Platform Strategy Strengthens Earnings Visibility

• Advanta platform accelerates.
Advanta recorded a 26% YoY increase in revenue to Rs 1,669 crore, driven by a 14% volume expansion in the seeds segment. Integration with the post-harvest business continues to unlock operational synergies.

• Specialty chemicals gain relevance.
The Super Specialty Chemicals (SSC) business posted an 18% revenue increase, supported by higher volumes and contract manufacturing, enhancing margin stability and diversification.

• Credit profile improves.
All three major global rating agencies—S&P, Fitch, and Moody’s—revised UPL’s outlook from negative to stable during the quarter, reflecting improved financial discipline and balance sheet strength.

Financial Trajectory Points to Sustained Recovery

Geojit expects adjusted PAT to nearly triple between FY25 and FY27, supported by operating leverage, cost discipline, and platform-led growth.

Capital Allocation and Cost Discipline Remain Central

• Right issue strengthens balance sheet.
UPL successfully completed the final call of its rights issue in September, raising Rs 1,685 crore, which has improved liquidity and reduced financial stress.

• Capex remains measured.
Management guided for FY26 organic capex in the range of $200–225 million, evenly split between tangible and intangible assets, ensuring growth without straining cash flows.

• Working capital efficiency improves.
Normalisation of channel inventories and improved receivables management are expected to support cash flow generation in H2FY26.

Stock Levels and Investment Strategy

• Current Market Price (CMP): Rs 781
• Rating: ACCUMULATE
• Target Price: Rs 879
• Upside Potential: ~13%
• Time Horizon: 12 months

Key Technical Levels:

Immediate support: Rs 735

Strong accumulation zone: Rs 700–720

Near-term resistance: Rs 820

Breakout confirmation: Above Rs 845

Medium-term investor target: Rs 879

Geojit advises accumulating the stock on declines, given improving earnings visibility but limited near-term rerating.

Key Risks to Monitor

• Weather-related demand volatility.
Unfavourable weather conditions could impact agrochemical demand in key regions.

• Currency fluctuations.
Given its global footprint, UPL remains exposed to forex volatility, which could affect reported earnings.

• Input cost reversal.
Any sharp increase in raw material costs may pressure margins if pricing remains flat.

Bottomline: Recovery Narrative Gains Credibility

UPL appears to have crossed a critical inflection point, with Q2FY26 confirming that the worst of the earnings downturn is behind it. Volume-led growth, margin normalisation, and improved financial discipline have restored investor confidence. While the stock may not offer explosive upside in the near term, Geojit’s ACCUMULATE call reflects a steadily improving business profile and a credible path to sustained profitability. For investors seeking exposure to a global agrochemicals recovery with improving balance sheet strength, UPL presents a measured, medium-term opportunity.