Fitch Downgrades UPL Corp to ‘BB+’; Outlook Negative
UPL’s weak performance mainly reflects sustained pressure from overcapacity in China.
UPL expects channel destocking, which has affected demand, to subside by 1HFY25. However, the outlook for capacity in China is more uncertain. We assume UPL’s product prices and margins to rise meaningfully from 4QFY24 on supply rationalisation in China in response to weak profitability. However, there is risk that the glut will persist for several years and constrain UPL’s EBITDA margin improvement.
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