ABB India Ltd. share price target

Strong Order Backlog Offers Revenue Visibility; Inflows Anticipated:Order booking for Q2CY17 grew by 12.8% to Rs. 23 Bn and the same for H1CY17 grew by 20.0% to Rs. 46 Bn taking the total order backlog to Rs. 121 Bn by end of Q2CY17 which includes Rs. 3.5 Bn transmission order and rest of the book splitequally between large and short cycle orders.

ff ABB India reported strong earnings in 2QCY17. Its PAT grew by 34.9% YoY at Rs0.75bn in 2QCY17 while revenue rose by 6.0% YoY to Rs23.3bn in line with our estimate owing to better execution in Electrification Products (+20% YoY). ff ABB India was among the earliest players to tap solar opportunity...

ABB India continues to report steady improvement in margins led by operational efficiencies and focus on products. Though its EBITDA margin rose by 110bps YoY to 6.1%, EBITDA margins were impacted due to one-off rise in other expenses towards product development. Initiatives undertaken in past 3-4 years in terms of increased localization, rationalization of supply chain, improving efficiency, better project management and lower input prices aided ABB to report steady improvement in margins. Further, customized offerings, continued focus on cost, differentiated portfolio in line with India's vision of growth through digital technologies supported YoY improvement in net working capital position. PBIT margins for Robotics & Motion rose by...

1.2xCY17, one could argue, bodes well. That may not be the case, however. With 50% of orders skewed to medium to long cycle, the revenue recognition may shift to a stretched timeline. The 8.3% YoY growth in Q1CY17 revenue to Rs.21.6bn may continue in tepid pace. Further, transition to IND AS, changing revenue mix and provisions may spoil the EBITDA for days to come. This was evident in the flat EBITDA of Rs.1.7bn. This bodes no well. This, in turn, will translate in lower revenues and lower profitability. Adding to that, ABB India, for yet another time, has reclassified its segmental reporting....

Robust Order Intake Improves Revenue Visibility: Q1 order booking, backlog and revenue better in many years - Order bookingduring Q1CY17 grew by 28.0% with base orders growing by 17.0% on YoY basis to Rs.23,420mn and order backlog standing at Rs.120bn by end of Q1CY17 which includes Rs.3.5bn transmission order and rest of the book split equally between large and short cycle orders. Revenue (net) for ABB grew by 8.4% on YoY basis to Rs.21,460mn during Q1CY17.

Well-placed in Power T&D; Space; Order Book Remains Robust While ABB India's revenue rose by 9.4% YoY to Rs22.9bn broadly in-line with our estimate of Rs23.0bn, execution in Electrification Products (+3.5% YoY) & Process/Industrial Automation (+3.4% YoY) was modest. Impacted by provisioning of Expected Credit Loss (ECL) under INDAS accounting system, EBITDA stood at Rs1.7bn (-0.9% YoY) vs. our estimate of Rs1.9bn. Its PAT came in at Rs0.88bn vs. our estimate of Rs0.92bn. Outperforming the BSE Capital Goods Index, ABB India has gained 40% since our initiation report on January 12, 2017. However, we continue to remain positive on the stock as the fundamentals are improving. Post impressive run-up since our BUY recommendation, the stock is trading at...

Order Backlog Offers Revenue Visibility; Positive FactorsFully Priced: ABB's full year order book increased to Rs.1,24,660mn; while for the quarter thesame reached to Rs.56,280mn which are higher by 53.9% and 173.5% respectively, when compared to year ago level. ABB consortium secured Pugalur-Raigarh Ultra High Voltage Direct Current (UHVDC) project with ABB's share at Rs.36,000mnwhich is a major order.

Strong order backlog a relief: ABB starts the next calendar year 2017 with Rs118 bn (+49% YoY). There are many aspects that worked well in favour of ABB. The $132 bn railway capex plans has translated into orders. And many in future as well. Railway orders are a strong suit. For instance, 52% of domestic locomotives run on ABB turbochargers. And ABB is confident of retaining the top spot. Furthers, SEB's continued preference for products like Gas Insulated Switchgears (GIS) aid further inflow. In Q4CY16, ABB has won Power Grid's big ticket project worth Rs43 bn. The Raigarh-Pugalur 800 kilovolt (kV) ultrahigh-voltage direct current (UHVDC) system will connect Raigarh in Central India to Pugalur in the southern state of Tamil Nadu....

Order Inflows Remain Robust with Possible Margin Expansion: ABB India order inflow during Q3FY16 stood at Rs.29,670mn, for the 9MFY16 order inflows were at Rs.68,370mn which is higherby 13.2% on a YoY comparison to H1FY15, whereas order backlog by end of Q3FY16 reached to Rs.86,760mn cushioningrevenue visibility for forward 9-12 months. Revenue, EBITDA and Adj. PAT (excluding other income) for 9MFY16 reached to Rs.60,746mn, Rs.3,825mn and Rs.915mn which is a growth of 7.9%, 4.7% and 8.7% respectively on YoY basis. Other income grew by 59.9% during 9MFY16 contributing to 56.0% of the unadjusted PAT.

After a long-spell, the order inflows are strong. Further, the outlook too. Prospects of new orders be it HVDC, transportation and process automation they are clear on cards. The disappointment in operating profit, specifically in power grids, falls squarely on the shoulders of conservative accounting policy. Now over the last the two quarters, the stock has corrected 22%. With improving outlook, we upgrade the stock to HOLD, from earlier SELL....