Hold ABB; target of Rs 797: Firstcall Research

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Firstcall Research has recommended hold rating on ABB with a target of Rs 797, in its November 30, 2012 research report.
 
“ABB Group Company was incorporated in India in 1949; it is leader in power automation technologies. These technologies enable industrial customers to improve performance along with lower environment impact. The ABB Group has 14 manufacturing units in India. It operates in 100 countries and has employed 1,20,000 people. In India it has presence across 30 marketing offices, 8 service centers, 3 logistics warehouses and network of 750 channel partners. The history of ABB goes back to the late nineteenth century, and is a long and illustrious record of innovation and technological leadership in many industries. Having helped countries all over the world to build, develop and maintain infrastructures, ABB has in recent years gone over from large-scale solutions to alternative energy and the advanced products and technologies in power and automation that constitute its Industrial IT offering.”
 
“ABB is a global leader in power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impact. For more than 100 years, ABB and its predecessor companies have set the pace for innovation in technologies to harvest energy, improve productivity, safeguard the environment, increase profits, and more. The company modern-day power and automation technologies are derived from the efforts of dozens of leading companies and thousands of talented individuals worldwide.”
 
“ABB is the leading power & automation engineering companies and its portfolio ranges from light switches to robots, and from huge electrical transformers to control systems that manage entire power networks & factories in the world and the largest in India, reported its financial results for the quarter ended 30th Sep, 2012. The third quarter witness a healthy increase in sales but the moderate decline in profit was a result of delayed projects and the accounting policy to take all anticipated increase in project costs due to slow progress in some large infrastructure and industrial projects.”
 
“The company’s net profit decreased to Rs.213.70 million against Rs.221.57 million in the corresponding quarter ending of previous year, and decrease of 3.55%. Revenue for the quarter rose 3.73% to Rs.18086.10 million from Rs.17435.26 million, when compared with the prior year period. A reported earnings per share of the company is at Rs.1.01 a share during the quarter, decrease of 3.55% over previous year period. Profit before interest, depreciation and tax is Rs.673.40 millions as against Rs.704.18 millions in the corresponding period of the previous year.”
 
“At the current market price of Rs 712, the stock P/E ratio is at 71.03 x CY12E and 64.15 x CY13E respectively. Earning per share (EPS) of the company for the earnings for CY12E and CY13E is seen at Rs.10.02 and Rs.11.10 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 14% and 55% over 2010 to 2013E respectively. On the basis of EV/EBITDA, the stock trades at 33.89 x for CY12E and 30.82 x for CY13E. Price to Book Value of the stock is expected to be at 5.49 x and 5.06 x respectively for CY12E and CY13E. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘HOLD’ in this particular scrip with a target price of Rs 797 for medium to long term investment,” says Firstcall Research report.

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