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UPL share price: Shares of agrochemical player UPL Limited cracked 10% on Monday, February 23, after the company announced a group structuring plan to integrate its Indian and overseas crop protection businesses, prompting negative reactions from brokerages and investors.

UPL share price hit the lower price band of ₹676.60, falling 10% from its last closing price of ₹751.75 apiece on the BSE.

UPL, last Friday, said it is undertaking a three-step restructuring to create UPL Global (UPL 2) as a unified India and international crop protection platform, positioning it as the world’s second-largest listed pure-play crop protection company.

The plan involves merging UPL SAS into UPL, demerging the India Crop Protection business into UPL Global, and merging UPL Cayman into UPL 2, alongside Advanta’s IPO, consolidating its seeds and Decco businesses.

UPL will remain the parent and capital allocator, with plans to enhance transparency and potentially eliminate the prevailing conglomerate discount to UPL.

The restructuring simplifies the group into independently benchmarkable pure plays, improving transparency, strategic focus, driving synergies and enabling value unlocking. UPL 2 becomes a focused global crop protection platform, while UPL 1 sharpens its manufacturing-led B2B positioning.

The move also supports subsidiary-level capital raises, accelerates deleveraging, and strengthens the pathway to valuation re-rating, said analysts at Motilal Oswal Financial Services.

However, the move does not address the current debt overhang, prompting a cautious view from another domestic brokerage Nuvama Research. "The transaction is cash and tax neutral, protects minority interests and does not alter the capital structure, with no material impact on current leverage overhang. Given the recent stock run-up, unresolved leverage concerns and post-restructuring dilution, we downgrade the stock to ‘HOLD’," said the brokerage.

The said restructuring keeps total debt similar, even though redistributed between two entities. Net debt in UPL Global should be ~ ₹19000 crore, while that in the standalone business should be ~ ₹3200 crore. "Deleveraging here on would remain contingent to cash flow generation and working capital management, which in our view is event neutral," it added, while revising UPL share price target to ₹816 apiece.

More to come…

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