The shares of leading heavy engineering and industrial equipment manufacturers gained 7.7% to a 52-week high price of ₹5,374.45 apiece after Jefferies upgraded the target price with an upside potential of 23%.
ABB India Ltd. shares have gained a return of 23% in the last six months and 68% in the last year. The company has a market capitalization of ₹1,12,979 crore.
ABB India Limited is an integrated power equipment manufacturer supplying a complete range of engineering, products, solutions, and services in areas of automation and power technology.
ABB India is a subsidiary of ABB Ltd which is a leading electrification and automation company globally. ABB India derives significant benefits from its parent in the form of access to ABB’s centralised R&D facilities.
The company generates 38% of its revenue from the electrification business, followed by 38% from the industrial motion business segment, 21% from the industrial automation segment, and 3% from the robotics and discrete automation segment.
In CY23, the company generated 90% of its revenue from the domestic market and 10% from the international market.
The company’s operational revenue has increased by 14 percent year on year from ₹2,427 crores in Q3FY23 to ₹2,757 crores in Q3FY24, while net profit increased by 11 percent from ₹ 305 crores to ₹339 crores.
Jefferies has recommended a buy target on ABB India Ltd The brokerage has given a target of ₹6,115 per share, representing an upside of 23 percent from Wednesday’s close price.
The brokerage noted that despite a 7 percent revenue miss leading to a lower-than-expected EBITDA in the quarter, ABB experienced a significant increase in order flow, up by 35 percent on-year. This indicates robust revenue growth prospects for the company.
The company’s CY23 margins saw a substantial 303-basis-point increase, reaching 14.3 percent. Meanwhile, ABB’s renewables segment has been identified as a high-growth area, and Jefferies anticipates that operating leverage will continue to benefit from double-digit execution growth.
The ABB management has conveyed optimism regarding the company’s performance, specifically emphasizing robust orders in the motion/electrification product segments.
Furthermore, the management has spotlighted high-growth segments such as rail and Metro, electronics, and data centers, while also acknowledging moderate-growth areas including renewables, auto, warehouse and logistics, and building/water infrastructure.As per Moneycontrol report.
Written by Omkar Chitnis
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