Shares of ABB India slumped 7 percent on January 30 after the company's parent--ABB Plc's quarterly earnings highlighted a drop in orders from the India region. This sparked concerns of a similar weakness seeping into ABB India's October-December earnings that are due for a release on February 17.
ABB Plc's earnings report revealed a 21 percent year-on-year decline in orders from the India region for the quarter ending December. It's important to note that these figures represent orders from third-party customers in India placed with ABB entities, suggesting a likely weak performance for the Indian subsidiary in the quarter.
Around noon, shares of ABB India were trading at Rs 5,727.65 on the NSE. The stock has slipped 43 percent from its all-time high of Rs 9,149.
The slump in the stock was also exacerbated by a surge in trading volumes in the counter. As much as four lakh shares of the company changed hands on the exchanges so far, already double the one-month daily traded average of two lakh shares.
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ABB India's earnings were under pressure in Q2 as well. Lower-than-expected order inflows and weaker execution combined with the changing mix of order book towards a higher share of long-gestation, large-sized orders weighed on the company's performance. Order inflow growth across segments, except electrification, was also hit by decision delays from the private sector and high base in select segments.
Brokerage firm, Motilal Oswal Financial Services expect the near-term execution velocity for ABB India to be affected by slower-than-expected growth in order inflows and a shift of order book towards longer-gestation projects.
"However, with higher value-added content in large-sized order inflows, we expect margin performance to remain healthy," the brokerage stated. MOFSL has a 'buy' call on ABB India with a price target of Rs 8,500.
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