Shares of ABB India surged over 7 percent to reach a new high of Rs 7,791.50 on the National Stock Exchange (NSE) on May 13, driven by the company’s impressive March quarter earnings that exceeded market expectations. The company’s net profit saw a remarkable 82 percent year-on-year increase to Rs 467 crore, attributed to higher revenue.
Analysts maintained a positive outlook on the stock, citing factors such as the company’s robust performance and significant rise in total income, which increased by 29 percent year-on-year to Rs 3,080 crore. Nomura highlighted ABB India’s EBITDA margin of 18.3 percent in the March quarter as a positive surprise, attributing it to the execution of higher margin orders and efficient capacity utilization.
Nomura also noted that ABB has undergone structural changes over the past three years, resulting in a margin trajectory of 14-15 percent. They anticipate sustainable growth driven by factors like premiumization, projecting revenue, EBITDA, and PAT (profit after tax) to grow by 18, 21, and 22 percent, respectively, over CY23-26.
However, Nomura maintained a ‘Neutral’ rating on ABB stock due to its expensive valuations, setting a sum-of-the-parts (SOTP)-based target price of Rs 6,660. Motilal Oswal, on the other hand, sees further potential for margin improvement for ABB, emphasizing its advantageous position in critical segments such as electrification and automation.
Motilal Oswal analysts expect favorable margin impacts from the pass-on of lower raw material prices and improved product pricing. They raised their margin estimates for CY24, CY25, and CY26, projecting strong performance in the March quarter and a favorable demand scenario for ABB.
Jefferies, maintaining a ‘buy’ rating on the stock, increased the target price to Rs 8,845 per share, emphasizing ABB’s potential for order flow growth post-elections in the second half of CY24.
At 9:51 am, ABB shares were trading 7.2 percent higher at Rs 7,700 apiece on NSE, reflecting investor optimism. Over the past year, the stock has delivered significant returns, doubling investors’ money, outperforming the benchmark Nifty 50 by a wide margin.
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