UPL shares rose 5 per cent to ₹514 on Monday after reports highlighted growth potential for its speciality chemicals business, Superform. Motilal Oswal said, "Superform is looking to re-accelerate speciality-chemicals growth." The company plans to expand into battery chemicals and increase cyanide capacity, aiming to capture demand outside of China.
Shares of UPL Ltd rose about 5 per cent to ₹514 on Monday after brokerage reports highlighted the growth potential of Superform, the company's speciality chemicals business subsidiary.
The brokerage said Superform is targeting revenue growth of 20-23 per cent annually, with phosphorus and cyanide chemistries emerging as key growth drivers.
The Superform business will also expanding into battery chemicals, seeking to capitalise on demand for specialised materials and opportunities to diversify global supply chains beyond China.
"Superform bis looking to re-accelerate speciality-chemicals growth, targeting a 45-50 per cent contribution to total revenue over time, while clocking a 20 per cent revenue CAGR, with the segment likely to outpace overall business growth", said a Motilal Oswal Financial Services report.
It added that Superform plans annual capital expenditure of $100 million to $125 million through FY30 to support its expansion plans.
UPL's global manufacturing and distribution network, comprising over 40 facilities across 11 countries and a presence in over 130 countries, gives Superform access to international customers without requiring it to build a distribution network from scratch.
The brokerage also highlighted the business's backward and forward integration, which it said could strengthen supply-chain resilience, reduce dependence on external suppliers and improve cost competitiveness.
The China plus 1 trend is expected to provide an additional growth opportunity, as customers seek alternatives to Chinese suppliers in specialised chemical categories.
Superform is scaling its cyanide capacity from about 17,000 tonnes to 50,000 tonnes, with a longer-term ambition of reaching around 200,000 tonnes, according to the report.
Superform is also exploring opportunities in battery materials with commercialisation targeted in the next 18-24 months, with Superform engaging electrolyte manufacturers seeking suppliers outside China. The company is also exploring sodium-ion battery materials, including cyanide-based Prussian Blue and Prussian White cathode materials used in energy-storage applications.
Motilal Oswal estimates UPL's revenue, EBITDA and adjusted profit after tax will grow at compound annual growth rates of 7 per cent, 9 per cent and 28 per cent till FY28.