Sell ABB; target of Rs 950: Motilal Oswal

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Motilal Oswal's research report on ABB

2QCY18 revenue rose 22% YoY to INR27.1b, broadly in line with our estimate of INR27b. EBIDTA margin of 7.2% (+60bp YoY) was below our estimate of 7.8%. EBITDA grew 33% YoY to INR1.96b, below our estimate of INR2.1b, impacted by an adverse revenue mix, an increase in raw material prices and weakening of the rupee. PAT of INR1.0b, too, missed our estimate of INR1.1b.

Outlook

We lower our CY18/19 estimates by 8%/2% to factor in lower margins as a result of higher project sales and the negative impact of currency depreciation. We maintain Sell given premium valuations, with a TP of INR950 (30x Mar'20 EPS of INR31.4, in line with 10-year average).

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