ABB India - Q3 FY21 Result Update - YES Securities

(Rating: ADD, TP: Rs 1472, Upside 3%)

- The company is witnessing highest growth in data center followed by renewables, electronics manufacturing, Food & Beverage (growing in mid-double digit), Power distribution (electrification distribution portfolio has seen lot of initiatives by government), water & waste treatment (continues to see traction), railway and metro (growing at 10%), and automotive (witnessing a comeback). Some of the muted segments are building & Infrastructure, Oil & Gas, chemicals, cement, steel, metal & mining, with Power generation at the bottom.

- We retain our CY21E/CY22E earnings estimates as we have already factored in earnings recovery led by margin expansion on the account of i) Increasing contribution of high margin 'electrification products', ii) Parent's endeavor to increase margins by leveraging relatively low cost India operations, iii) Exit from solar inverter business which had wafer thin margins, iv) Higher sales contribution by exports and services, v) Increase in local content, and vi) Efficiency improvement through cost rationalization.

- We believe, ABB will retain its focus on growth segments like Data Center, Electronics manufacturing, Food & beverages, Pharma, Renewables, Rail & Metros while conventional sectors like Powergen, Oil & Gas, Metal & Mining would continue to remain muted. Post our Q3CY20 result note, the stock has rallied by ~50% and we now lot of positives are priced in at current levels. Hence, we downgrade the stock to ADD from BUY for a target price of Rs1472.

Shares of ABB India Limited was last trading in BSE at Rs.1476 as compared to the previous close of Rs. 1421. The total number of shares traded during the day was 17223 in over 1218 trades.

The stock hit an intraday high of Rs. 1485.3 and intraday low of 1429.1. The net turnover during the day was Rs. 24950530.

Source : Equity Bulls

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