Accumulate ABB India; target of Rs 4119: Prabhudas Lilladher

Prabhudas Lilladher's research report on ABB India

We revise our EPS estimates by +9.5%/+9.6% for CY23/24E given strong order pipeline, sustainable margins and management’s focus on inorganic growth. ABB India (ABB) reported a strong quarterly performance with revenue growth of 22.5% YoY and EBITDA margins expansion of 229bps YoY. Going forward, margins are expected to sustain at current level (EBITDAM- 11.8% in Q1CY23) led by better price realization and company’s focus on operational efficiencies. Order inflow will continue its momentum for short cycle order from tier 2/3/4 cities with customer focusing on quality products. Enquiry pipeline stands strong from high growth areas such as data center, renewables, electronics etc. We remain positive on ABB given its 1) diversified business model, 2) focus on high growth segments (Electronics, Data center etc), 3) strong order pipeline and 4) organic/inorganic growth.

Outlook

The stock is trading at PE of 81.7x/67.4x/56.3x CY23/24/25E. We roll forward to Jun’25 estimates and maintain ‘Accumulate’ rating on stock with TP of Rs4,119 (Rs3,371 earlier), valuing it at 68x Jun’25E (earlier 67x CY24E), given strong outlook.