UPL gains 2%, Morgan Stanley says spin-off to unlock shareholder value

UPL has has spun off speciality chemicals business to wholly-owned subsidiary UPL Speciality Chemicals for Rs 3,752 crore

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Shares of UPL gained 2 percent on June 26 as Morgan Stanley sees the hiving off of the speciality chemical business as a positive.

On June 23, the company announced that it spun off the speciality chemical business, which also includes AI manufacturing,  on a slump sale basis as a going concern to wholly-owned subsidiary UPL Speciality Chemicals for Rs 3,752 crore. UPL expects to close the transaction within three to four months of receiving shareholder approval.

At 10.30 am, the agrochemical company was trading 1.6 percent higher at Rs 677.5 on the National Stock Exchange.

Morgan Stanley has an “overweight”’ rating on the stock with a target price of Rs 856.

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The de-merger of specialty chemical and AI business will not only create a separate pure-play platform with greater operational flexibility but will also form a dedicated team and help in improving capital allocation, the foreign brokerage firm said. The hive-off will potentially unlock shareholder value, Morgan Stanley added.

UPL Ltd is an agriculture solutions company engaged in the agrochemicals and industrial chemicals business with manufacturing sites across the world. Through recent expansion, the company has become a leader in global food systems as well, the company said.

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