UPL margin drops 5.17 points as Q1 loss persists
Year-on-year revenue rose 10.47%, but costs grew 11.65%; management also flagged a crop-protection volume decline.
Filed 03 Aug 2026, 15:17 IST · UPL Ltd (UPL)
Key takeaways
- Revenue rose 10.47% year on year, but expenses grew 11.65%, reducing operating margin by 0.91 percentage points.
- UPL's consolidated net loss narrowed to Rs 73 cr from Rs 176 cr, helped by a 15.39% year-on-year decline in interest costs.
- Operating margin at 14.24% was 4.48 percentage points below the 18.72% median for 44 reported commodities peers.
Price around the results
Q1FY27 margin reversal kept UPL loss-making
UPL's consolidated operating margin fell 5.17 percentage points sequentially to 14.24%, as revenue dropped 44.47% while expenses declined only 40.91%. Profit before tax remained negative at Rs 109 cr, although the loss narrowed from Rs 190 cr a year earlier. The company told analysts that crop-protection volumes declined in Q1FY27.
Lower interest costs helped, but below-operating charges remained heavy
Interest expense fell 15.39% year on year to Rs 852 cr, but depreciation rose 13.82% to Rs 832 cr, limiting the benefit at the pre-tax level. Other income of Rs 125 cr represented -114.68% of reported pre-tax profit because PBT was negative, so it does not indicate recurring operating profitability. A reported tax benefit of Rs 36 cr also reduced the net loss.
UPL's four-quarter margin climb ended in Q1FY27
Operating margin had risen from 15.15% in Q1FY26 to 19.41% in Q4FY26 before falling to 14.24% this quarter, reversing the improvement seen across the prior three quarters. Year on year, the margin declined 0.91 percentage points because expenses grew faster than revenue. The current margin was also 4.48 percentage points below the 18.72% median among 44 commodities peers, placing UPL ninth from the bottom.
Management keeps margin and deleveraging priorities despite operating pressures
Management said its FY27 priorities remain margin improvement, PATMI, deleveraging and returns. It also said FY27 guidance assumes no further adverse weather conditions, including El Niño, while the presentation identified El Niño, war disruption and a liquidity crunch as pressures at UPL SAS. Management said cash flows were lower year on year because of higher planned capex and investments.
Q1FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹10,181 cr | ₹18,335 cr | -44.47% | +10.47% |
| Other income | ₹125 cr | ₹85 cr | +47.06% | -17.76% |
| Expenses | ₹8,731 cr | ₹14,777 cr | -40.91% | +11.65% |
| Operating profit | ₹1,450 cr | ₹3,558 cr | -59.25% | +3.87% |
| Operating margin (%) | 14.24% | 19.41% | — | — |
| Interest | ₹852 cr | ₹836 cr | +1.91% | -15.39% |
| Depreciation | ₹832 cr | ₹915 cr | -9.07% | +13.82% |
| Profit before tax | ₹-109 cr | ₹1,892 cr | — | +42.63% |
| Tax | ₹-36 cr | ₹598 cr | — | -157.14% |
| Net profit | ₹-73 cr | ₹1,294 cr | — | +58.52% |
| EPS (₹) | ₹0.12 | ₹12.57 | -99.05% | — |
Operating margin of 14.24% compares with a Commodities sector median of 18.72% across 44 peers that have reported Q1FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- The FY27 guidance assumes no further adverse weather conditions, including El Niño.
- FY27 strategic priorities remain improving margins, PATMI, deleveraging and returns.
Expansion
- The company said cash flows were lower year-on-year due to higher planned capex and investments.
Problems & risks
- The crop protection segment experienced a volume decline in Q1FY27.
- UPL SAS identified El Niño, war disruption and a liquidity crunch as headwinds.
What to watch
- Whether operating margin recovers from 14.24% after the 5.17-percentage-point sequential decline.
- Whether crop-protection volumes improve after the Q1FY27 decline.
- Whether interest expense remains near Rs 852 cr while depreciation remains near Rs 832 cr.