Reliance Securities
ABB (Buy)
CMP: ₹1,402.4
Target: ₹1,678
ABB Ltd (formerly ASEA Brown Boveri) is a holding company. The company’s segments include electrification products, robotics and motion, industrial automation, power grids, and corporate and other. It is engaged in serving customers in utilities, industry and transport and infrastructure.
ABB’s order inflow rose to ₹2,350 crore in 3QCY18 driven by strong growth in base order led by offerings for smart factory applications and digital solution (ABB Ability) in sectors i.e. food and beverage, and building automation.
Aided by global growth in renewable energy and industrial energy, export orders continued its solid growth trajectory.
ABB India (ABB) has delivered a robust performance in 3QCY18 with its revenue rising by 30.7 per cent YoY to ₹25.1bn led by strong growth by all business verticals while reported PAT surged by 29.9 per cent y-o-y to ₹108 crore.
Looking ahead, we expect ABB’s earnings to witness 30.1 per cent CAGR through CY17-19E, while RoE is expected to improve to 14.8 per cent in CY19E from 11.5 per cent in CY17.
We believe ABB is well-placed in high growth opportunities in railways, T&D, digitalisation and E-mobility space. f
We maintain our ‘buy’ recommendation on the stock with a target price of ₹1,678 (50x CY19 earnings).
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