Accumulate ABB India; target of Rs 3371: Prabhudas Lilladher

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Prabhudas Lilladher's research report on ABB India

We revise our CY23/24E estimates by 4.5%/2.4%, considering healthy enquiry pipeline along with management focus on operational efficiencies, capacity enhancement and inorganic growth opportunities. ABB India (ABB) reported strong quarterly performance with revenue up 15.5% YoY and EBITDA margin expanding by 620bps YoY (driven by revenue mix, volume growth and supply chain management). Base order continued its momentum with 21% YoY growth to Rs23.4bn with Tier 3/4 cities gaining traction from increased contribution (48% in Q4CY22 v/s 43% earlier), owing to expanding channel partners base and increased awareness among OEMs. Off the total cash balance of Rs36bn, ~Rs20bn is envisaged towards inorganic expansion.

Outlook

We remain positive on ABB in long run given its 1) diversified business model focusing on high growth segments, 2) strong inquiry pipeline, 3) healthy exports outlook and 4) organic/inorganic growth. We maintain ‘Accumulate’ rating on stock with revised TP of Rs3,371 (Rs3,291 earlier) valuing it at PE of 67x CY24E.

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ABB India - 14 -02 - 2023 - prabhu