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About the stock: ABB India (ABB) is a leader in technology solutions connecting software to its electrification, robotics, automation and motion portfolio.

         * It operates in mainly three key segments including robotics & motion (41%), electrification (38%), industrial/process automation (22%)

         * Well placed to gain from the overall energy market transformation from electrification to automation & digitisation

Q1CY23 Results: ABB reported a strong performance in Q1CY23*.

        * Revenue at | 2411 crore, grew 22.5% YoY, owing to better execution and value added volume mix

        * EBITDA came in at | 285.3 crore with margins of 11.8%. Strong margin growth was led by revenue mix, operational efficiencies coupled with cost optimisation

        * Hence, adjusted PAT came in at | 245.2 crore, up 64.4% YoY

       * Order inflows for Q1CY23 came in at ~| 3125 crore, up 4% YoY

What should investors do? Overall, further penetration of automation & digitisation products and services across segments to drive long term growth.

• We remain long term positive and change our rating from BUY to HOLD on the stock

Target Price and Valuation: We value ABB at | 3735 (67x on CY24E EPS)

Key triggers for future price performance:

* It expects operating margins to improve with increase in capacity utilisation, change in revenue mix, cost optimisation programmes and localisation

* ABB continues to see a recovery in certain segments and industries like data centre, renewables, electronics, food & beverages and pharma. It continues to focus on order win and seamless execution across projects

* Expect revenue, EBITDA to grow at a CAGR of ~21.2%, 39.4%, respectively, in CY21-24E due to strong traction in short cycle products and services Alternate Stock Idea: We also like Larsen & Toubro in our coverage.

* Focus on asset monetisation to further strengthen the balance sheet

Alternate Stock Idea: We also like Larsen & Toubro in our coverage.

* Focus on asset monetisation to further strengthen the balance sheet and improve return ratios. Strong b/s, controlled working capital and strong

* BUY with a target price of | 2795

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