Prabhudas Lilladher's research report on ABB
ABB India (ABB) reported decent performance higher than our and consensus estimates led by several cost control initiatives and gradual recovery in utilization. Revenue declined 43% YoY impacted due to weakness across business verticals, due nation-wide lockdown. ABB secured orders worth Rs12bn (down 40% YoY) on account of delay in awarding activity. However, management is expecting some pick up in ordering from sectors such as F&B, data centers, pharmaceuticals, energy, chemicals, railways & metros which are expected to drive growth. Outstanding order book stands at Rs46.7bn as on 2QCY20 providing revenue visibility for few quarters. Management believes the impact of Covid-19 would continue in the short term as pandemic situation is yet to settle-down. We believe expect slow ramp-up for 2HCY20 as some segments are still witnessing a slow recovery due to pandemic.
ABB’s resilient business model, healthy global distribution network, diversified business segment and comfortable balance sheet would help faster recovery basis economic activity starts picking up in the long run. The stock is currently trading at 48.4x/44x CY21E/CY22E. We maintain Hold rating with TP of Rs874 (valuing at 45x CY21E).
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