Buy ABB India; target of Rs 8500: Motilal Oswal

Motilal Oswal's research report on ABB India

ABB India’s 1QCY24 results were much ahead of our estimates, driven largely by strong improvement in margin. Our thesis, as highlighted in our latest AR2023 update (link), of margin improvement is playing out quite well and we expect the company to keep benefiting from its pricing advantage, operating leverage gain, improving product mix toward higher-margin segments, and a wide product portfolio. We expect a large part of these gains to sustain in the coming years amid a strong demand scenario. We increase our estimates for CY24/25/26 by 23%/24%/20% to bake in 1QCY24 performance and higher margins.

Outlook

We increase our TP to INR8,500 (from INR7,500), implying a P/E of 70x on Jun’26E EPS. We maintain BUY and ABB remains our top pick in the sector.