Buy ABB India; target of Rs 5800: Motilal Oswal

Motilal Oswal is bullish on ABB India recommended buy rating on the stock with a target price of Rs 5800 in its research report dated February 21, 2024.

Broker Research

February 22, 2024 / 15:37 IST

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Motilal Oswal's research report on ABB India

ABB’s PAT came in ahead of our estimate in 4QCY23, as margins significantly beat our expectation. Revenue growth was lower than our estimate due to a higher share of its long-duration projects business. Order inflows have plateaued over the last four quarters and future growth will depend on how fast the orders are finalized and how fast the private sector recovers. ABB has been benefiting from strong demand for quality players across industries - government or private. With a deeper penetration across market segments and geographies and control over costs via localization, ABB has been able to gain higher margins. We continue to believe that ABB’s addressable market is expanding fast across segments like transmission, railways, data center, electronics, and PLI-led capex.

Outlook

We expect the company’s margins to remain strong at around 14%. We raise our CY24/CY25 EPS estimates by 2%/4.4% and increase our DCF-based TP to INR5,800 (from INR5,480), implying a P/E of 65x on Mar’26E EPS. ABB remains our top pick in the sector.

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