ABB India sinks on UBS downgrade, sees limited room for valuation re-rating

Over the past year, ABB India shares jumped 80 percent in trade.

ABB India shares fell almost three percent in trade after international brokerage UBS downgraded the counter to 'neutral', seeing limited room for a re-rating.

UBS slashed its rating on ABB India from 'buy' to 'neutral', but it also hiked its target price to Rs 9,100 per share from Rs 8,830 apiece.

At 11.40 am, ABB India shares were trading at Rs 8,209.2, lower by three percent on the NSE compared to the previous session's closing price.

Follow our market blog to catch all the live updates

According to the brokerage, the valuations leave limited room for a re-rating, however earnings will remain supportive.

There are two factors which could change the brokerage's outlook on the firm: a higher quarterly order run-rate and robust margins in the emerging portfolio.

A quarterly order run-rate beyond Rs 3,800 crore mark from the mobility arm or higher base order-growth will drive better earnings growth. Additionally, robust margins in ABB's emerging portfolio in
electrification will drive the firm's margins higher than the brokerage expects.

Currently, UBS sees ABB India as the best exposure to emerging infrastructure and niche products across conventional and new segments.

Over the past year, ABB India shares jumped 80 percent in trade as against the 26 percent rise in the benchmark Nifty 50 index.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.