Prabhudas Lilladher's research report on ABB India
We revise our CY25/26E EPS estimates by -2.9%/-6.1% factoring in pricing normalization and transient base order moderation but upgrade the rating to ‘BUY’ from Accumulate due to recent sharp correction in stock price and ABB’s sustained growth momentum. ABB India (ABB) reported strong quarterly performance with revenue growing 22.0% YoY and EBITDA margin expanding by 440bps YoY to 19.5%. During the quarter, the growth was led by strong momentum in Electrification and execution upticks in Data center orders. ABB’s opportunity pipeline remains robust, fueled by traction across F&B, chemicals, pharma, automotive, power distribution, water and new edge industries such as electronics, data centers and renewables. In addition, with the premiumization trend at the center stage in India, higher demand for premium products will aid margin expansion. Base order intake is projected to sustain at ~Rs27bn per quarter and continues to remain a key monitorable. With price normalization on the horizon, ABB has provided guidance for a PAT margin of 12-15% going forward (15.4% in CY24), underscoring its confidence in continued profitable growth.
Outlook
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. The stock is trading at a P/E of 53.3x/46.6x CY25/26E. We roll forward to CY26E and value the company at a PE of 63x CY26E (75x Jun’26E earlier) with a revised TP of Rs6,955 (Rs8,133 earlier). Upgrade to ‘BUY’.
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