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Last Updated : Feb 21, 2014 10:08 AM IST | Source: CNBC-TV18

Worst over for capital goods, margin growth to sustain: ABB

The company Tuesday reported a net profit of Rs 58.6 crore for the December quarter, up 248 percent year-on-year, driven by a 122 percent jump in operating profits to Rs 149 crore. Growth in topline was a meager 6 percent.

The worst is possibly behind for the capital goods industry, says Amlan Datta Majumdar, Country CFO, ABB India. The company Tuesday reported a net profit of Rs 58.6 crore for the December quarter, up 248 percent year-on-year, driven by a 122 percent jump in operating profits to Rs 149 crore. Growth in topline was a meager 6 percent.

A slowing economy and lack of clearances for major projects has been hurting capital goods firms in general.

Majumdar said initiatives like local manufacturing helped improve margins, and is hopeful that this margin expansion can be sustained. Operating margin for the December quarter was 6.8 percent compared to 3.2 percent the year before. Margins also benefited from a weak rupee, which helped the company earn more on its exports.

ABB's order book for calendar year 2013 stood at Rs 7709 crore, and Majumdar says he is targeting a double digit growth for this year.

Majumdar said the company will be bidding selectively for power systems orders.

Brokerage house Macquarie and Bank of America Merrill have retained their 'underperform' ratings on the stock after the fourth quarter numbers, citing expensive valuations. Deutsche Securities has upgraded the stock to ‘buy’ from ‘hold’ saying benefits of cost savings was driving up margins, suggesting that the worst of the price wars was over and competitive intensity was abating.



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First Published on Feb 19, 2014 10:36 am
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