ABB Q2 net seen up 41.6%, OPM may drive bottomline: Poll

ABB's second quarter profit after tax may surge 41.6 percent to Rs 67.5 crore compared to Rs 47.7 crore in the year-ago period, according to the average of analysts polled by CNBC-TV18.

Total income from operations is seen rising 7 percent to Rs 1,950 crore from Rs 1,822 crore during the same period.

The power and automation technology company follows January-December as its financial year.

Despite lower order backlog, analysts expect revenue growth may be driven by rising share of short cycle products and pull up in the power products business. However, sales may remain weak in power systems and process automation divisions.

Execution may improve in company’s low voltage and power system segments. Analysts believe ABB continued ist focus on increased localisation and cost optimisation.

Continued localisation drive may help EBITDA margin expand, so the trend of margin expansion seen till now may sustain. Margin expansion may drive profit.

Operating profit (earnings before interest, tax, depreciation and amortisation) is likely to increase 21.4 percent year-on-year to Rs 153 crore and margin may expand 90 basis points to 7.8 percent in the quarter gone by.

Direct raw material cost declined to 66 percent of revenue at the end of March quarter from a peak of 81 percent in Q4CY10. Even the management has set an internal target to reduce this to 65 percent over the next few years.

Order inflows may remain a key monitorable during the quarter.