Accumulate ABB India; target of Rs 3291: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on ABB India

ABB India (ABB) reported strong quarterly performance with revenue growth of 19.2% YoY, owing to healthy order book execution, strong demand from high growth segments. EBITDA margins were healthy at 10%, owing to healthy execution, revenue mix and focus on cost optimization. Current capacity utilization stands at ~85-90%, focus will be on improving operational efficiencies and enhancing the utilization levels through improving factory optimization ensuring sufficient capacity to meet strong demand. Recently, ABB has inaugurated smart instrumentation factory for production of measurement and analytical devices, to meet increasing domestic demand. Order pipeline continues to remain strong in high growth sectors such as data center, railways & Metro, F&B, renewables etc. While, data center market opportunity stands strong, on back of 5G roll out, RBI’s data localization norms, and cloud storage adoption. ABB’s offerings in data center space includes UPS, MV & LV, Switchgear, LV components, Automation & Instrumentation, Motors, Drives, Digital Power Trains ensuring strong growth. Management targets PBT margins of ~10% going forward. We remain positive on ABB in long run given its diversified business model with focus on high growth segments, healthy exports outlook and organic as well as inorganic growth. Given robust enquiry pipeline, penetration in Tier 3 & 4 markets driving volume growth across businesses and focus on operational efficiencies, we have revised our earnings estimates upwards by 4.9%/3.9%/5.6% for CY22/CY23/CY24.

Outlook

The stock is trading at PE of 94.8x/76.1x/61.6x CY22/23/24E. We maintain Accumulate rating on stock with revised TP of Rs3,291 (Rs3,115 earlier) valuing it at PE of 67x CY25E.

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ABB India - 16 -11-2022 - prabhu