Executives said UPL moved early to raise prices after the conflict in West Asia pushed up costs for energy-intensive products, helping shield profitability in the June quarter. With rivals now beginning to follow suit, management said the likelihood of broad-based price cuts has become “very low”, with any further increases expected to remain in the low- to mid-single digits.
Pricing power replaces price wars
The June quarter marked a clear shift in industry dynamics. After nearly two years of excess inventories and pricing pressure, agrochemical companies are once again finding room to pass on higher costs rather than compete aggressively on price.
UPL reported positive pricing across all its businesses, with overall pricing contributing around 3% to revenue growth. The India crop protection business delivered pricing gains of 8-9%, seeds saw pricing improve by 13-14%, while specialty chemicals recorded the strongest increase of 34-35%.
Those pricing actions helped revenue rise over 10% during the quarter and expanded contribution margin by 100 basis points to 45.2%. Consolidated EBITDA margin improved to 14.7%, while the India crop protection business stood out, with EBITDA rising 34% and margins expanding by roughly 750 basis points despite delayed monsoon-led volume pressures. UPL Corp, the group’s global crop protection business, also reported healthier contribution margins, supported by a better product mix, improved capacity utilisation and lower-cost inventory secured earlier in the cycle.
Management, however, cautioned that the exceptionally strong profitability seen in the India business during the June quarter reflected seasonal factors and would normalise over the remainder of the year, although full-year margins are still expected to improve materially from FY26.
Guidance intact, but uncertainties linger
Management retained its FY27 guidance of 7-11% revenue growth and 10-14% EBITDA growth, with forecasts based on constant currency assumptions. Growth is expected to be led by the global crop protection business, while seeds and specialty chemicals are also projected to remain key contributors.
Even so, executives acknowledged that the operating backdrop remains uncertain. The conflict in West Asia continues to keep freight and raw material costs elevated, while weather risks, including the possibility of El Niño, could influence planting activity across key agricultural markets.
The company also noted that distributors continue to buy on a “just-in-time” basis following the painful inventory correction of FY24, keeping channel inventory lean despite resilient underlying farm demand.
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UPL’s own inventory increased during the quarter as it built stocks ahead of the upcoming season and accounted for higher replacement costs, while raw material inventory currently covers around 90 days of production.
