Accumulate ABB India; target of Rs 8400: Prabhudas Lilladher

Prabhudas Lilladher's research report on ABB India

We revise our CY24/25E EPS estimates by +16.0%/+21.4% factoring in a robust demand environment and healthy margin improvement. ABB India (ABB) reported robust quarterly performance with revenue growing 27.8% YoY and EBITDA margin expanding by 652bps YoY to 18.3%. ABB is building a technologically strong portfolio to cater to high growth segments such as data centers, rail & metro and electronics which continue to see good traction. Demand is particularly scaling up in Data Centers with traction from global majors. Buildings & Infrastructure is another growing opportunity in India for Motion and Electrification, led by affordable housing and building automation. Meanwhile, the company continues to penetrate Tier II & III cities. We remain positive on ABB given 1) increasing traction for energy efficient products, 2) changing customer preference towards premium quality products, 3) diversified business model, 4) focus on high growth segments such as Data Centers, Electronics, Rail & Metro, Renewables, etc., and 5) strong domestic order pipeline.

Outlook

The stock is trading at a P/E of 99.6x/80.2x/65.7x CY24/25/26E.. We roll forward to Jun-26E and maintain ‘Accumulate’ rating with a revised TP of Rs8,400 (Rs5,331 earlier) valuing it at a P/E of 76x Jun-26E (65x CY25 earlier) on account of robust long-term demand, strong moat, and improving mix & profitability.

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