This Nifty50 stock surged 78% in last one year despite poor earnings, global headwinds

UPL's stellar gains and low valuations have attracted both foreign investors and domestic investors. The FII (foreign institutional investors) shareholding in UPL increased to 43.07 percent in June 2019 from 42.79 percent in March. During the same period, retail investors stake jumped to 15.05 percent from 3.81 percent.

Interestingly, investors are stocking up the shares despite weak global macro cues. Recently, German chemical giant BASF cut its full-year forecast and also warned that profits may fall by as much as 47 percent in the second quarter of the calendar year 2019, citing the US-China trade war and weakness in the automobile sector. The news brought jitters to UPL as it is one of the major agrochemical competitors in the market.

HSBC Research has also raised concerns on declining soybean demand, pricing pressure from the US-China trade tensions and the African swine fever (ASF).

The brokerage house said, “Soyabean demand and pricing are likely to remain under pressure due to the as-yet unresolved US-China trade tensions, events like ASF and the rising US exports to the EU and other countries, which could keep Brazil price premiums in check, unlike in 2018.”

About 35 percent of UPL’s overall revenues come from Brazil and other Latin American regions. This year, Brazil exports have already declined by 9 percent.