Accumulate ABB India; target of Rs 3115: Prabhudas Lilladher

Prabhudas Lilladher's research report on ABB India

ABB India (ABB) reported strong quarterly performance with revenue growth of 44% YoY, driven by short cycle orders and strong traction in exports business, with EBITDA margin expansion of 303bps YoY to 9.7% led by better revenue mix & price realization, healthy volume growth and increased capacity utilization. Revenue contribution from distribution channel increased to 34% from 30% in Q2CY21, driven by penetration in tier 3/4 cities. Going forward, order inflows momentum to continue led by companies focs on strong customer connect through diversified channels. Order pipeline remains strong from high growth sectors such as data center, railways & Metro, F&B and renewables, metals, cements, Oil & Gas. High growth segment such as data centre, renewables, water & wastewater, warehouse logistics, Electronics, F&B, railway, metro etc. will likely be key growth drivers in the medium term. Management targets PBT margins of ~10% going forward.

Outlook

Stock is trading at PE of 91.9x/73.1x/60.2 CY22/23/24E. We roll forward our estimated to CY24 and upgrade rating to ‘Accumulate’ from Hold with revised TP of Rs3,115 (Rs2,293 earlier) valuing it at PE of 67x CY24E.

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ABB India - 120822 - prabhu