Prabhudas Lilladher's research report on ABB India
We revise our CY24/25E EPS estimates by -2.6%/-6.4% factoring in slower execution due to increasing share of large orders. ABB India (ABB) reported mixed quarterly performance with revenue growing 5.2% YoY and EBITDA margin expanding by 271bps YoY to 18.6%. Domestic demand outlook remains strong, fueled by growth in data centers, O&G investments, and electronics, and rising demand for propulsion systems and traction motors from rail and metro sectors. Higher capacity utilization, stable input costs, and increasing share of exports are expected to support margin expansion. Additionally, a higher share of large orders reflects increasing public and private capital expenditure, which may extend the average execution cycle in the near term. We remain positive on ABB given 1) increasing traction for energy efficient and premium quality products, 2) resilient business model, 3) focus on high-growth areas such as data centers, rail & metro, renewables and electronics, and 4) strong domestic order pipeline.
Outlook
The stock is trading at a P/E of 82.2x/71.8x/60.7x CY24/25/26E. We maintain ‘Accumulate’ rating with a revised TP of Rs8,133 (Rs8,833 earlier) valuing it at a P/E of 75x Jun’26E (76x Jun’26E earlier).
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