Reduce ABB - Result Update - Kotak

Revenues growth was flat for the quarter on a yoy basis, a reflection of the sedate market conditions for the T&D equipment makers. Margins have not recovered completely as some projects in process automation segment continue to have cost over-runs.

- The T&D equipment industry continues to reel under cost pressures, aggressively priced imports, domestic oversupply in transformer capacity and slackening investment in power generation and core sector. We remain negative on the T&D equipment makers like ABB, Areva, CGL and Voltamp.

- We value the stock at 26x one year forward earnings thus arriving at a price target of Rs 556 (Rs 505 earlier). In view of the steep downside to target price, we maintain Reduce on the stock.

Source : Equity Bulls

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