Sell ABB; target of Rs 1200: Motilal Oswal

Motilal Oswal's research report on ABB

Gross margin at 36.2% improved 30bp YoY to touch an all-time high level. Initiatives undertaken over past 3-4 years in terms of increased localization, rationalization of supply chain, improving efficiency, better project management capabilities and lower raw material prices have helped keep gross margin at all-time high.

Outlook

We marginally cut our estimates for CY17/18 by 4%/1% to factor in margin compression on account of ECL provisioning. We downgrade our rating to Sell given premium valuations while maintaining our TP of INR 1,200 (35x March 2019E EPS of INR 34).