ABB India sees demand from data centres, order visibility for next 3-4 quarters

Power equipment manufacturer ABB India's shares were sharply lower by 5% in early trade on November 5 after results that missed street expectations, though the management commentary in the analyst concall was very upbeat.

ABB India said the share of large orders in the orderbook has increased, and the company is seeing an uptick in large contracts, with a healthy visibility for business in the next 3-4 quarters. However, the conversion of orderbook into revenue may not happen at the same pace as before, given the larger size of the fresh orders now, ABB India added. It continues to see momentum in base orders, and added that the demand from data centres is healthy.

"The large orders, a marker of economic robustness led by government led capex revival, emerged from diverse sectors like transportation, metals, and even new ones like the data centres," Sanjeev Sharma, Managing Director, ABB India said after the results.

ABB India reported a 21.4 percent rise in net profit at Rs 440 crore for the third quarter while the total income increased 5.2% on year to Rs 3,005.05 crore from Rs 2,846.01 crore in the year-ago period. Profit growth was aided by higher other income. The results were a miss across parameters, said Motilal Oswal, adding that the order book has tilted towards slightly longer gestation projects. MOSL, however, recommended a Buy on ABB India with a target price of Rs 7362 per share.