Engineering major ABB India is expected to report strong revenue growth for the March quarter on growing domestic demand in the electrification business. Analysts at JM Financials expect the margins to rise year-on-year. ABB will report its numbers on May 10.
According to two estimates available with Moneycontrol, quarterly revenue is expected to increase around 15-18 percent on-year to around Rs 2,845.2 crore. Anand Rathi sees quarterly net profit for ABB at Rs 327.2 crore, up 33 percent from a year ago, while JM Financial pegs it at Rs 299.5 crore, a 22 percent rise.
On a quarterly basis, net profit is expected to decline around 5 percent. EBITDA or earnings before interest, taxes, depreciation and amortisation for the same period is expected to be around 14.2 percent against around 11.8 percent in the previous fiscal.
In a March 2024 report, analysts at foreign brokerage UBS said there was enough scope for ABB to deliver on profitability, led by low/medium-voltage electrification and motion, both of which are enjoying strong demand. The company is sharpening its focus on product range expansion and availability.
UBS analysts see ABB as the best play on the emerging infrastructure scale-up in low/medium-voltage electrification.
In their Q4 earnings preview report, analysts at Anand Rathi estimated that on an aggregate basis, revenue would expand annually and quarterly on better execution given the order book strength. Additionally, the EBITDA margin is expected to improve on a year-on-year basis but normalise on a sequential basis.
They had previously stated that ABB could be a beneficiary of the unfolding macro themes and ongoing capex. "We expect ABB to expand its EBITDA margin to 14.6 percent by CY2026 (from 14.3 percent in CY2023), chiefly on the persistent trend of premiumisation, value-based selling and better absorption of fixed costs on higher utilisation," the report noted.
ICICI Securities analysts noted that given the uncertainty arising from the outcome of the general election and the delays pertaining to it, order inflow in H1CY24E may remain subdued on the high base of last year. "We expect revenue growth to remain muted in CY24E. Moreover, we believe operating margin may have peaked as most gains pertaining to easing raw material cost have been realised," the report said.
ABB India is an engineering company in the field of energy production, power transmission, transportation, process automation and pollution control. The stock has gained around 460 percent in the last five years and around 88 percent in the last one year. The current market cap of ABB India is around Rs 1.45 lakh crore.
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