ABB - Result Update - Nirmal Bang

- ABB posted 1QCY13 revenue of Rs19.7bn, up 10.0% YoY, driven by higher execution in the power systems segment. The top-line was marginally above our/Bloomberg consensus estimates by 3.8%/6.5%, respectively.

- EBITDA grew 9.3% YoY at Rs1bn, in line with our estimate, translating to an operating margin of 5.4% for the quarter, the same as in 1QCY12.

- Higher interest costs on short-term borrowing by ABB in 4QCY12 to address its working capital needs led to a 10.5% YoY decline in PAT at Rs426mn, in line with our estimate of Rs424mn. However, net profit was 17.1% below Bloomberg consensus estimate of Rs514mn as we believe the Bloomberg consensus undermined the impact of rising interest costs.

- Lack of corporate capex revival, weak earnings visibility and higher valuation led us to retain our Sell rating on the stock with a target price of Rs492, based on 30xCY14E EPS.

Source : Equity Bulls

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