Buy ABB India, target price Rs 8,500: Motilal Oswal Financial Services

Motilal Oswal Financial Services has a buy call on ABB India with a target price of Rs 8,500. The current market price of ABB India Ltd. is Rs 7081.35. ABB India, incorporated in 1949, is a Large Cap company with a market cap of Rs 150499.45 crore, operating in the Engineering sector.

ABB India's key Products/Revenue Segments include Switch Gear Items, Motors/Alternators/Generators, Others, Electronic Control And Supply Units For Variable Speed Drives, Sale of services, Other Operating Revenue, Scrap for the year ending 31-Dec-2023.



Financials
For the quarter ended 30-09-2024, the company has reported a Standalone Total Income of Rs 3005.05 crore, up 3% from last quarter Total Income of Rs 2917.61 crore and up 5.59% from last year same quarter Total Income of Rs 2846.01 crore. The company has reported net profit after tax of Rs 440.45 crore in the latest quarter.

Investment Rationale
ABB is currently trading at 69.5x/59.7x P/E on CY25/CY26 estimates. Motilal Oswal Financial Services has cut its estimates by 9%/10%/11% for CY24E/CY25E/CY26E to factor in 9MCY24 performance and the near-term impact on execution due to the longer execution cycle of orders. The brokerage expects revenue growth of 15%/18%/20% in CY24/CY25/CY26 and margins of 19.0%/18.6%/18.0%, translating into a PAT growth of 51%/16%/16% for CY24/CY25/CY26E. Accordingly, they estimate a PAT CAGR of 27% over CY23-26. Motilal Oswal reiterates its BUY rating with a DCF-based target price of Rs 8,500, implying a multiple of 72x P/E on Dec-26E EPS

Promoter/FII Holdings
Promoters held 75 per cent stake in the company as of 30-Sep-2024, while FIIs owned 12.28 per cent, DIIs 5.34 per cent.