Shares of this large-cap stock dealing in Heavy Electrical Equipment jumped more than 6 percent in Wednesday’s trading session after an international Brokerage raised its target price for the company’s stock with a potential upside of 20 percent. In the last six months, the company’s stock has gained close to 50 percent for its holders.
With a market capitalization of Rs 1.34 lakh crores, the stocks of ABB India Limited started their trading session on Wednesday at Rs 6,198.85 and currently trades at Rs 6,299.95, gaining a whopping 6.20 percent as compared to the previous closing levels of Rs 5,931.90 apiece.
Such sharp movements in the company’s share price were observed after UBS, a multinational investment bank and financial services company, raised its target price on the company’s stock to Rs 7,550 from Rs 5,380 given earlier.
The latter indicates a potential upside of approximately 20 percent compared to the prevailing share price level. The Brokerage believes that ABB India’s ‘Motion’ and ‘Electrification’ segments will drive its 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.”, the Brokerage said.
During the last couple of financial quarters, the company’s basic business indicators, viz, its operating revenues as well as after-tax profits, witnessed a marginal dip in numbers with the former slipping from Rs 2,769 crores during Q3FY23 to Rs 2,757 crores during Q4FY23, and the latter, during the same period, reducing from Rs 363 crores to Rs 339 crores.
The company’s ratio analysis, on the other hand, portrays positive movements in its return on equity (RoE) as well as return on capital employed (RoCE) numbers. The former marginally rose from 20.57 percent during FY22 to 20.89 percent during FY23 and the latter from 20.86 percent to 27.91 percent keeping the time horizon the same.
As per the recent presentations, the total number of orders received by the company during Q4FY23 stands at Rs 3,147 crores, a drastic growth of nearly 35 percent compared to orders worth Rs 2,335 crores during the same quarter a year ago.
ABB India Limited is engaged in the business of offering systems as well as services for electrical distribution, machinery components, power grids & plants, and other industrial applications. The company derives most of its revenue from domestic operations supported by several manufacturing sites.
Written by Amit Madnani
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