Sell ABB India; target of Rs 755: HDFC Securities

HDFC Securities' research report on ABB India

ABB business model is highly sensitive to operating leverage as Rs 3.2bn revenue shortfall (for 10days of disruption in Mar-20) led to sharp erosion in profitability (Rs 1.1bn contribution shortfall) with Rev/EBIDTA/APAT de-growing 18/90/90% YoY. We expect weaker performance in 2QCY20 with 1.5months of loss of operations. ABB 1QCY20 commentary signalled that it remains well geared to serve clients only if there is demand pick up. Muted Public/Pvt capex remains key headwind.

Outlook

We maintain SELL on ABB India Ltd. (ABB) with a TP of Rs 755/sh (42x Mar-22E EPS).