Reduce ABB India; target of Rs 6700: ICICI Securities

ICICI Securities research report on ABB India

ABB India (ABB) reported muted revenue of INR 29bn, +5% YoY compared to double-digit growth reported in last 14 quarters. Note that revenues grew by 19%, 24%, 22% and 20% in CY21, CY22, CY23 and H1CY24 respectively. Order inflow for the quarter was INR 34bn, + 11% YoY. The order inflow in last few quarters has been aided by large order inflow (high lifecycle). As a result, the order backlog is INR 100bn – comprising of 75% from base orders (muted) and 25% from large orders. Thus, we expect revenues growth to be subdued in near term compared to recent history. Margins continues to surprise positively with EBITDA margin at 18.6%, up 280bps YoY – aided by execution in high-margin large orders contract.

Outlook

The stock is currently trading at 75x CY25E earnings. We maintain REDUCE rating with a revised TP of INR 6,700 per share.