Enam Securities put 'underperformer' rating on ABB
Enam Securities has initiated coverage on ABB with an ‘underperformer’ rating. The broking house expects ABB’s earnings to decline by 17% in the current fiscal and grow marginally thereafter.
By ET Bureau |
ABB
CMP: Rs 364.50
TARGET PRICE: Rs 270
Enam Securities has initiated coverage on ABB with an ���underperformer��� rating. The broking house expects ABB���s earnings to decline by 17% in the current fiscal and grow marginally thereafter. ���On the back of falling utilisation and margin contraction, RoCE (return on capital employed) is expected to contract from 59% in 2007 to 27% in 2010.
At the current price, the stock trades at 18x ��� which makes it significantly higher than the previous down cycle of 13 to 15 times,��� the Enam report said. ABB���s automation segment is dependent on capex of metals, cement, oil and gas sectors, which are expected to decline. The broking house expects revenue and order flow to come down by 6% and 7%, respectively, in CY09. The company management has also highlighted that operating margins could decline as a result of competition. ABB���s working capital has shot up to 16% of sales during CY08.
CMP: Rs 364.50
TARGET PRICE: Rs 270
Enam Securities has initiated coverage on ABB with an ���underperformer��� rating. The broking house expects ABB���s earnings to decline by 17% in the current fiscal and grow marginally thereafter. ���On the back of falling utilisation and margin contraction, RoCE (return on capital employed) is expected to contract from 59% in 2007 to 27% in 2010.
At the current price, the stock trades at 18x ��� which makes it significantly higher than the previous down cycle of 13 to 15 times,��� the Enam report said. ABB���s automation segment is dependent on capex of metals, cement, oil and gas sectors, which are expected to decline. The broking house expects revenue and order flow to come down by 6% and 7%, respectively, in CY09. The company management has also highlighted that operating margins could decline as a result of competition. ABB���s working capital has shot up to 16% of sales during CY08.
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