Tag: ABB India

ABB India is now valued at one-fifth of its foreign parent as stock climbs to fresh-high

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The market capitalisation of ABB India surged past the $20 billion mark for the first time on Monday after better-than-expected March quarter earnings saw its stock surge the most in seven years. Shares of ABB India rallied as much as 11.2% to close the session at ₹7,984.25 on the NSE.

This is in comparison with a market valuation of $98.9 billion commanded by its Switzerland-based parent, ABB Ltd. Both the parent and subsidiary saw their stocks hit record highs in Monday’s trade.

However, the Indian arm had revenue of $1.3 billion in FY23, which was less than 4% of its parent’s full-year net sales, Bloomberg data shows. Nevertheless, the Indian subsidiary commands a premium valuation over its global parent. The stock of ABB India is trading at 98 times its FY25 earnings, against close to 22x commanded by ABB Ltd.

During the quarter ended March 2024, the revenue of ABB India increased by 28% year on year (YoY) to ₹3,080 crore, aided by strong order conversion across all divisions. While direct sales contributed 59% of the top line, the remaining 41% came through partners. Further, the company’s EBITDA margin expanded 652 basis points YoY to 18.3%. The net profit for the quarter grew by 88% to ₹459 crore.

Jefferies, which has a “buy” rating on the stock with a 12-month target price of ₹8,845 observes that ABB India’s March quarter EBITDA was 52% higher than its expectations as margins expanded by 650 bps YoY to 18.3% vs expectations of 12.2%. “Order flows rose 15% YoY and are likely to pick up further after elections in 2HCY24,” the foreign brokerage wrote in an investor note. Jefferies further added that the company’s release indicates that there is no material one-off in margins.

Switzerland-based ABB operates in more than 100 countries across Europe, the Americas and the Asia, Middle East and Africa (AMEA) region. Europe and the Americas together account for over 70% of sales.

Shares of ABB India have rallied as much as 71% since the beginning of 2024, against less than 2% returns yielded by the benchmark Nifty50.

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ABB India shares hit record high on anticipation of more orders post elections

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of ABB India Ltd. climbed more than 9% to hit an all-time high of ₹7,884.40 on Monday, in an otherwise volatile session, after the company’s fourth quarter earnings beat Street expectations.

Global brokerage firm Nomura said ABB India’s EBITDA margin at 18.3% during the January to March period came in as a positive surprise, mainly due to execution of higher margin orders and efficient capacity utilisation in the electrification segment, and pricing advantage in select products and a favourable job mix in the Motion segment.

Jefferies has maintained a ‘Buy’ recommendation on the stock and raised the target price to ₹8,845 per share from ₹6,250 earlier.

The brokerage said that ABB India’s EBITDA beat expectations as margin expanded by 650 basis points year-on-year to 18.3% as against 12.2% expectations. The company’s release indicates that there is no material one-off in margin.

“The expansion of margins was a result of the operational leverage on higher volumes, seamless execution of continuous improvement initiatives, positive price impact enough to offset inflation and cost increase, higher share of service and export revenues and stable currency and commodity price level,” ABB said.

In a note, Jefferies said it believes renewables is a moderate-growth area as compared to high-growth earlier. It expects ABB’s order flows to pick up further after elections in the second half of Calendar Year 2024.

ABB is currently trading at 64.2 times and 55.6 times P/E (price-earnings) on CY25 and CY26 estimates, according to Motilal Oswal.

The brokerage expects revenue to grow by 29%, 26%, and 20% in CY24, CY25, and CY26 and bake in margins of 17.4%, 17.3%, and 16.6% for the same period, translating into a profit after tax growth of 54%, 24%, and 16% for CY24, CY25, CY26 estimates. This results in a profit CAGR of 30% over CY23 to CY26.

Motilal has maintained a ‘Buy’ on ABB India wit a target price of ₹8,500 per share. “The company has one of the best Return on invested capital (ROIC) in the capital goods sector and will continue to benefit from improved addressable market and will improve its share of high-growth segments,” it said.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

ABB India beats the Street as net profit zooms 88% in first quarter

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Electrification and automation major ABB India Ltd on Friday (May 10) reported an 87.6% year-on-year (YoY) jump in net profit at ₹459.3 crore for the first quarter that ended March 31, 2024, on strong growth momentum in orders with a healthy mix of short and long-term opportunities.

The company follows the January to December financial year.

In the corresponding quarter, ABB India posted a net profit of ₹245 crore, the company said in a regulatory filing. CNBC-TV18 poll had predicted a profit of ₹333 crore for the quarter under review.

The company’s revenue from operations increased 27.8% to ₹3,080.4 crore against ₹2,411 crore in the corresponding period of the preceding fiscal. CNBC-TV18 poll had predicted revenue of ₹2,880 crore for the quarter under review.

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At the operating level, EBITDA jumped 98.1% to ₹565.2 crore in the first quarter of this fiscal over ₹285 crore in the corresponding period in the previous fiscal. CNBC-TV18 poll had predicted an EBITDA of ₹404 crore for the quarter under review.

The EBITDA margin stood at 18.4% in the reporting quarter compared to 11.8% in the year-ago period. EBITDA is earnings before interest, tax, depreciation, and amortisation. CNBC-TV18 poll had predicted a margin of 14% for the quarter under review.

Total orders surged to ₹3,607 crore, the highest for the first quarter in the last five years. From the market point of view, the strongest growth was witnessed in data centres, smart buildings, expansion in tier-2 and tier-3 cities, energy and logistics.

The company’s cash position continues to remain robust at ₹5,036 crore at the end of Q1 2024 against ₹3,942 crore in Q1 of calendar year 2023.

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“The increased demand for technologically superior solutions, coupled with the government’s capital expenditure focus on new-age themes such as energy efficiency, decarbonisation, and digitalization, has significantly driven our order momentum,” ABB India said.

The results came after the close of the market hours. Shares of ABB India Ltd ended at ₹7,182.15, up by ₹193.05, or 2.76%, on the BSE.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

What to expect from the likes of ABB, Siemens and BHEL

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The capital goods industry is expected to report average revenue growth of 16% and profit growth of around 17% for the January to March 2024 quarter. supported by record high order books and strong execution.

Cost-saving measures and operational efficiencies may lead to a 14% improvement in the earnings before interest, tax, depreciation, and amortisation (EBITDA). However, the margin outlook remains mixed.

While the order flow has been robust in the recent quarters, a slight moderation is expected now mainly an account of the elections.

Nonetheless, steady order inflows are projected in segments like renewable energy, power, transmission and distribution as well as defence.

Private investment has been selective so far and is also seeing some green shoots. So overall, the order momentum is expected to pick up meaningfully only after July to September quarter of the current financial (FY25).

Export orders, however, are a concern given the sluggishness in most geographies, geopolitical tensions as well as trade disruption.

Margin projections vary. GE T&D, Kirloskar Oil and ABB India are expected to witness expansion anywhere between 1% and 6% in their margins. Bharat Heavy Electricals Limited (BHEL), Siemens and to some extent, Thermax, however, may see some pressure.

Except for BHEL and CG Power, net profits are expected to climb for most of the companies.

In terms of stock performance, capital goods companies have seen a very strong surge with returns exceeding nearly 75% across the board for all companies.

In fact, on a year-to-date basis as well, the stocks have gained anywhere between 18% and 114% for some counters.

However, this strong surge has, in turn, pushed current valuations above the historical averages and the question remains; can these premium valuations be sustained? Will private capex drive the next leg of growth for these capital goods companies?

Renu Baid Pugalia, Senior VP of Research at IIFL Institutional Equities is bullish on companies like Bharat Electronics (BEL), ABB India, Cummins, and small-cap companies like Data Patterns from an earnings perspective.

“Even if we see companies like KEC, Kalpataru, from the lower base, should bounce back strongly on the earnings side. But names like CG Power, Siemens and Thermax will see barely single-digit growth in earnings because of a very high base last year. So to that extent, we expect some moderation on the earnings side for some of the diversified industrials,” she said.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

ABB India’s shares may rise to ₹7,550, predicts UBS as it bets on growth and margins

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of ABB India Ltd opened with gains of over 5% on Wednesday, March 27. This surge follows a forecast by the global brokerage firm UBS, which anticipates a potential upside of up to 27% from the previous day’s closing price. UBS highlighted the engineering services company’s good quality electrification and mobility growth.

UBS expects ABB India’s share price to reach ₹7,550 in the next 12 months. The foreign brokerage has retained its ‘Buy’ recommendation on ABB India and raised its price target on the stock to ₹7,550 from ₹5,380 earlier.

More upside to consensus on margins

Going ahead, the brokerage believes that ABB India’s electrification and motion will drive growth and margins. “We maintain our above-consensus forecasts on revenue growth and more importantly margins, and believe that ABB is the best play on the emerging infrastructure scale-up in low/medium-voltage electrification.”

In a note, UBS stated that a strong cyclical tailwind has led to robust growth and higher margins for most companies, including CG Power, ABB and SIEM, in recent quarters.

“While the consensus margin forecast for ABB has already been raised 210 basis points for 2024 in the past 12 months, along with a 3% upgrade in new order intake, we think there is ample scope for ABB to deliver on profitability, led by low/medium-voltage electrification and motion, both of which are enjoying strong demand, with ABB sharpening its focus on product range expansion and availability,” it said.

ABB’s low- and medium-voltage product suite is expanding in both range and geographical exposure, covering both conventional and emerging market segments. “There is a clear focus among global firms, like SIEM and Schneider, along with ABB, on capturing the long-term growth in electrification,” UBS noted.

On the motion side, UBS highlighted that mobility, including semi-highspeed rail, conventional rail, and metro, has led the step-up in order inflow run rate, which it thinks is sustainable on an annual basis, given that ABB is focusing on expanding capacity commensurately to tap the growth opportunities.

How is ABB’s growth story different?

While CG Power offers growth via exports and inorganic expansion, the business overlap between ABB and CG Power is largely limited to the motors segment, and within that only to low-tension motors, UBS said.

Further, the brokerage said that ABB India’s revenue overlap with SIEM and Schneider is more prominent. “We think there is significant scope for ABB to ramp up its low/medium voltage electrification portfolio where it trails Schneider and SIEM.”

Despite near-term concerns, UBS thinks there is plenty of scope for ABB India to scale up its new order growth across motion and low- and medium-voltage electrification product expansion, which augurs well for margins even from current levels.

UBS has also increased its 2024E and 2025E profit after tax by 12% and 14%, and its target price-earnings from 65 times to its historical peak of 75 times, as it believes ABB will continue to expand its product suite and capacity, especially in the highly scalable electrification segment, and gain market share in the mobility segment.

Shares of ABB India settled half-a-percent lower at ₹5,939 apiece on the NSE. The stock has rallied nearly 27% so far in 2024.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Swelling orderbook and special dividend take ABB shares 9% higher

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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ABB India Ltd shares rallied more than 9% on Wednesday, February 21, after the engineering services company reported strong financial results for the December quarter.

ABB India shares opened higher and advanced as much as 8.57% to hit a high of ₹4,910 apiece on BSE in morning deals. The stock is trading around 1.5% lower than its 52-week high of ₹4,984.30 hit on January 11, 2024.

The electrification and automation major on Tuesday reported a 13% rise in net profit to ₹345 crore for the December quarter of the current financial year compared to the year-ago period.

Revenue rose 14% to ₹2,757 crore for the quarter compared to the same period last year.

The company follows the January-December financial year. For the full fiscal, ABB India reported a profit of ₹1,248 crore in 2023 against ₹1,026 crore in 2022. Revenues rose to ₹10,447 crore in 2023 from ₹8,568 crore in 2022.

Order intake rose by 35% to ₹3,147 crore during the last quarter of CY2023, helping the company post the highest fourth-quarter revenue in the last five years.

The order backlog was ₹8,404 crore as of December 2023, showing a 30% growth YoY.

ABB India reported an EPS of ₹16.29 for the last quarter compared to ₹14.44 a year ago and ₹58.90 for CY2023 against ₹48.40 in 2022, reflecting the growth in profitability of the operations.

The ABB India board also recommended a final dividend of ₹23.8 a share. It had announced a special dividend of ₹5.5 per share in the second quarter of 2023.

The company also stated that it expects enhanced market penetration, leveraging its diverse portfolio to capitalize on increased economic activities across power transmission, clean energy, railways and metro, public infrastructure, automation, ably supported by government investments.

ABB India shares were trading 9.05% higher at ₹4,933.85 apiece at 11.30 am.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Stocks to Watch: Hindalco Industries, TCS, ABB India, Union Bank of India, Swan Energy and more

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

ABB India Q4 Results | Net profit rises 11% to ₹339 crore, firm declares final dividend of ₹23.8/share

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Electrification and automation company ABB India Ltd on Tuesday (February 20) reported a 10.9% year-on-year (YoY) increase in net profit at ₹338.7 crore for the fourth quarter that ended December 31, 2023.

In the corresponding quarter last year, ABB India posted a net profit of ₹305.3 crore, the company said in a regulatory filing. A CNBC-TV18 poll had predicted a profit of ₹300 crore for the quarter under review.

The company’s financial year starts on January 1.

The company’s revenue from operations increased 13.6% to ₹2,757.5 crore as against ₹2,427 crore in the corresponding period of the preceding fiscal. The CNBC-TV18 poll had predicted revenue of ₹3,040 crore for the quarter under review.

At the operating level, EBITDA rose 14.6% to ₹417.2 crore in the fourth quarter of this fiscal over ₹364.3 crore in the corresponding period in the previous fiscal. The CNBC-TV18 poll had predicted an EBITDA of ₹381 crore for the quarter under review.

EBITDA margin stood at 15.1% in the reporting quarter as compared to 15% in the corresponding period in the previous fiscal. EBITDA is earnings before interest, tax, depreciation, and amortisation. Our poll had predicted a margin of 12.5% for the quarter under review.

The company reported an EPS (Earnings Per Share) of ₹16.29 for the fourth quarter as compared to ₹14.44 and ₹58.90 for CY2023 vis-à-vis ₹48.40 year-on-year reflecting the growth in profitability of the operations. The company’s cash position continues to remain robust at ₹4,727 crore at the end of Q4 and CY2023.

The board recommended a final dividend of ₹23.8 per share, this is in addition to a special dividend of ₹5.5 per share declared in Q2 of 2023. The dividend, if declared at the 74th annual general meeting, will be paid after May 11, 2024, to those shareholders or their mandates whose names appear as members in the company’s register of members as holders of equity shares as at the end of the business hours on May 4, 2024.

The results came after the close of the market hours. Shares of ABB India Ltd ended at ₹4,522.10, up by ₹30.50, or 0.68% on the BSE.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

ABB India partners with Titagarh Rail for metro projects, bags Gujarat orders

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Electrification and automation major ABB India on Monday (November 20) said it has formed a strategic partnership with Titagarh Rail Systems to supply propulsion systems for metro rolling stock projects in India.

The partnership, aligned with the Indian government’s ‘Make in India’ and ‘Atmanirbhar Bharat’ initiatives, has already seen early success by winning orders to design and supply equipment for metro coaches for Gujarat.

The strategic partnership brings the two companies together to build on their potential and synergy to become an established player in the Indian market and expand their market base to other projects and countries.

The partnership covers an agreement for Titagarh to purchase ABB propulsion systems, including traction converters, auxiliary converters, traction motors, and TCMS software.

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It also includes securing the manufacturing rights and production licence for traction motors along with the complete transfer of technology of the GoA 4 (driverless metro) TCMS software from ABB to Titagarh.

Edgar Keller, President, Traction Business of ABB, said, this strategic partnership with Titagarh provides a strong foundation to enter and expand the company’s footprint in this key market, while also supporting the efforts to make rail transportation in India sustainable through its energy-efficient technology, fully produced in India.

Umesh Chowdhary, Vice Chairman and Managing Director of Titagarh, said the company has already set up manufacturing facilities for some of the items for the propulsion chain and is in the process of making it a holistic solution.

Titagarh specialises in the design, manufacture, supply, commissioning, and servicing of various passenger rolling stock and metro coaches for Indian and international markets.

ABB is a world leader in the field of the design, manufacture and servicing of propulsion systems and electrical equipment relating to rolling stock used for railways and metro systems.

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Shares of ABB India Ltd ended at ₹4,350, up by ₹65.45, or 1.53%, on the BSE.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow