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Result Highlights

* ABB’s sales grew by 7% YoY to Rs16.3 bn which was below our estimates. Motion (MO)/ Industrial Automation (IA)/ Electrification (EL)/ Robotics & Discrete Automation (RA) segment reported revenue growth of 11%/11%/2%/13% YoY respectively. Several segments were impacted during the quarter owing to COVID related demand and supply disruptions.

* EBITDA however saw a sharp jump with margin improving to 8.1% (as against our estimates of 7.1%). APAT stood at Rs 761 mn as against APAT of Rs.92 mn reported during same period last year.  

* Order inflow grew by 24% QoQ (‐7% YoY) to Rs18.2 bn. ABB secured orders for:

* Distributed control and safety system projects for one of the largest agro‐ chemical companies,  

* Robotic automation solution for building electric scooters for OLA,  

* ABB doubly fed induction generator for the wind sector for a renewable energy major,  

* Distributed control and manufacturing execution system for a pharma major and   v) Electrification solutions for an engineering company.

Our view:

We marginally reduce our topline estimates for CY21 to factor in the impact of COVID 19 on demand across segments.  We however expect earnings recovery to be strong with i) Efficiency improvement through cost rationalization ii) Increasing contribution of high margin ‘electrification products’ iii) Higher sales contribution by exports and services and iv) Increase in local content. We believe, ABB will retain its focus on growth segments like Data Center, Renewables, Electronics manufacturing, Food & beverages, Pharma, Railways & Metros while conventional sectors like Oil & Gas, Metal & Mining would continue to remain muted. We retain our ADD rating on the stock for a target price of Rs1474.

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