Reduce ABB India Ltd For Target Rs.3568 - Yes Securities
Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel
https://t.me/InvestmentGuruIndiacom
Download Telegram App before Joining the Channel
Our view
ABB India Ltd (ABB) reported a healthy quarterly performance, led by execution pickup across segments. With a favourable product mix and higher service income, the company was able to expand its margins on a YoY basis. The company reported strong quarterly order inflows of Rs31.2bn (up 36% YoY) spread across verticals. As on 1QCY23 order book stands at ~Rs71.7bn (0.8x TTM revenue), providing revenue visibility for next few quarters. Going forward the company expects good traction
from electronics, cement, steel, data centres, railways, EV, etc.
We believe ABB’s strong business model, healthy global distribution network, diversified business portfolio and strong cash position (~Rs40bn) would benefit the company as economic activity starts ramping up. The stock is currently trading at a PE
of 84x/73x CY23E/CY24E. Penciling in richer margin profile and robust business outlook, we increase our CY23E/CY24E EPS estimates by 27%/14% respectively. However, given the recent run-up in the stock price we downgrade it to REDUCE with
a revised TP of Rs3,568 valuing it at 70x CY24 EPS of Rs51 as we are of the view that the stock is richly valued at current levels.
Result Highlights
* Sales came in at ~Rs24.1bn (up 22% YoY) (YSL estimates ~Rs22bn) led by growth across segments where Robotics/Electrification/Industrial Automation/Motion business grew by 4%/16%/23%/36% YoY
* EBITDA was up 52% YoY at Rs2.8bn while margins came at 11.8% vs 9.5% in 1QCY22; below our estimates led by higher subcontracting, employee and other costs
* Adj PBT grew by 66% YoY to Rs3.3bn largely owing to higher other income (up 94% YoY)
* Adj PAT after continuing operations came in at Rs2.4bn Vs Rs1.5bn in 1QCY22
* Order inflows came in at Rs31.2bn, up 36% YoY. Order book stands comfortable at Rs71.7bn (0.8x TTM revenues)
To Read Complete Report & Disclaimer Click Here
Please refer disclaimer at https://yesinvest.in/privacy_policy_disclaimers
SEBI Registration number is INZ000185632
Above views are of the author and not of the website kindly read disclaimer
