ABB India Ltd. share price target

ABB India manufactures heavy engineering & industrial equipments and undertakes engineering and construction projects. The company operates mainly through the Robotics & Motion, Electrification products and...

EBITDA margins contracted across all segments except Motion. EBITDAmargincameinat2.4%down480bpsyoy,(muchaheadwith our/cons est. of 4.7%/4.3%) as lower revenues was offset to a...

Despite strong impact of the COVID-19 disruption on short duration businesses, ABBs 2QCY20 revenue growth decline was limited to 43% (v/s est. Importantly, the company has suggested that Jun-Jul20 marked double-digit YoY growth in order inflows/revenue. Industrial Automation revenue declined 37% YoY to INR2.4b and has Velocity of orders and revenues has been encouraging currently, with ABB witnessing double-digit YoY growth on a like-to-like basis. We maintain our multiple of 45x (at par with our target multiple for pure automation businesses and as justified by DCF; as well as ~min 1-year forward PE multiple for ABB over past 10 years). ABB is witnessing increasing spends in the Food and Beverages electronics Service revenue stood at INR2.53b in 2QCY20 v/s INR3.32b YoY. Believe the portfolio is well placed to see structural string growth from energy demerger of the Power Grid business, ABB Indias business is largely products and services-oriented with projects forming ~8% of revenue in 1HCY20.

Healthy cash position maintained at Rs15bn as on 2QCY20 despite the pandemic led by strong focus on cash collections. ABB India (ABB) reported decent performance higher than our and consensus estimates led by several cost control initiatives and gradual recovery in utilization. Revenue declined 43% YoY impacted due to weakness across business verticals, due nation-wide lockdown. ABB secured orders worth Rs12bn (down 40% YoY) on account of delay in awarding activity....

the tune of ~Rs2bn and c) cash collection worth ~Rs1.8bn during 1QCY20. ABB India (ABB) reported a disappointing quarter because of weakness across business segments, due to the outbreak of Covid-19 causing nationwide lockdown. Despite of weak economic environment, ABB has secured orders worth Rs19.5bn (up 10% YoY) and has an outstanding order book of Rs44.4bn as on 1QCY20. Management believes the impact of Covid-19 would continue in the short term as countries continue to face restriction with anticipated long-term economic consequences. Despite of short term disruptions we believe ABB's resilient business model, healthy global...

Considering the short-cycle nature of ABBs business and expectation of gradual recovery coupled with the impact of fixed costs, we have cut our CY20E/CY21E earnings by 60%/25%. PBT of INR648m saw negative impact due to (a) revenue shortfall of INR3.2b, which led to an impact of INR1.12b, (b) INR depreciation impact of INR350m, Exceptional item includes gain of INR384m which pertains to reversal of exceptional costs (related to sale of the Solar Power business) Total order inflows stood at INR19.5b, up 10% YoY. Given the short-cycle nature of its business and expectation of a gradual recovery coupled with the impact of fixed costs, we have cut our growth in services/exports revenue, which is our key investment thesis for There is no change in short/medium/long-term strategy. Lost INR2b on revenues and INR1.75b on collections due to the lockdown in Exports stood at 10% in 1Q v/s 14% in CY19 as the company could not ship out some orders toward the quarter end.

Revenue was down 18% yoy due to supply chain disruptions, lower servicerevenuesontheaccountofnationallockdown&nonreceipt of delivery clearances. Lockdown impact was Rs2bn. Industrial Automation (IA)/ Electrification (EL)/ Motion (MO)/ Robotics &...

ABB India has delivered a subdued performance in 4QCY19 with revenue declining by 1% YoY to Rs19.5bn owing to 20% lower revenue in industrial automation and significant decline in other segments. Revenue from Electrification and Motion segment grew by 11% and 7%, respectively. EBITDA margin fell by 390bps YoY to 7.1%, while EBITDA declined by 36% YoY to Rs1.4bn impacted by lower margin across segments. Adjusted PAT declined by 45% YoY to Rs1.1bn due to poor operating performance, while reported PAT declined by 81% YoY to Rs387mn, as the company has provided Rs697mn towards remeasurement of fixed assets and inventory for sale of solar inverter business. Order inflow declined by 16% YoY to Rs16bn in 4QCY19. The current order...

ABB India has delivered a subdued performance in 4QCY19 with revenue declining by 1% YoY to Rs19.5bn owing to 20% lower revenue in industrial automation and significant decline in other segments. Revenue from Electrification and Motion segment grew by 11% and 7%, respectively. EBITDA margin fell by 390bps YoY to 7.1%, while EBITDA declined by 36% YoY to Rs1.4bn impacted by lower margin across segments. Adjusted PAT declined by 45% YoY to Rs1.1bn due to poor operating performance, while reported PAT declined by 81% YoY to Rs387mn, as the company has provided Rs697mn towards remeasurement of fixed assets and inventory for sale of solar inverter business. Order inflow declined by 16% YoY to Rs16bn in 4QCY19. The current order...

ABB has levers in place to mitigate slow uptick in capex. One offs/legacy project margin hit has been a disappointment and continues to restrict margin expansion. Export growth is panning out well and mitigating domestic weakness. Balance sheet has net cash Rs 19.5bn to fund growth as an when recovery pans out. We believe rich valuation price in these tailwinds and multiple re-rating is contingent on capex recovery. We maintain NEU on ABB. Key risks (1) Delays in Government capex recovery, (2) Slowdown in private investments, and (3) INR depreciation. We maintain NEU on ABB India Ltd. (ABB) with a TP of Rs 1,219/sh (42x ABB continuing business). Whilst ABB is navigating through weak economic undercurrent and holding onto growth, capex recovery will take time to pan out. Strong balance sheet, Automation Products/Solutions expertise and cross cycles experience limits downside.