Prabhudas Lilladher Recommends ‘Accumulate’ Rating for ABB India with Target Price of Rs 8,833

Prabhudas Lilladher has issued a research report on ABB India, suggesting that investors should “accumulate” shares with a target price of Rs 8,833. This report, dated August 12, 2024, highlights the company’s strong performance and positive outlook.

Key Highlights:

• Earnings Estimates Revised: The report revises ABB India’s earnings per share (EPS) estimates for the years 2024 and 2025, increasing them by 11.1% and 6.6%, respectively. This revision is based on the company’s continued healthy prospects and improved profit margins.
• Strong Quarterly Performance: ABB India reported solid results for the latest quarter, with revenue growing by 12.8% year-on-year (YoY). The company’s EBITDA margin also saw significant improvement, expanding by 526 basis points to reach 19.2%.
• Domestic Demand: Demand within India remains strong, particularly in sectors like data centers, energy and metals automation, rail and metro technology, and robotics for electric vehicles (EVs) and electronics. The company is also seeing increasing business in Tier II and III cities.
• Capacity Expansion: ABB India has plans to expand its capacity across different segments to meet the expected demand over the next 5-10 years. This increased capacity will help improve profit margins as utilization rises.
• Selective Export Growth: While the company is seeing growing demand in export markets, it remains cautious and selective in its approach.

Positive Outlook:

Prabhudas Lilladher remains optimistic about ABB India’s future, citing several factors:

1. Growing demand for energy-efficient and high-quality products.
2. A resilient business model.
3. Focus on high-growth areas such as data centers, rail & metro, renewables, and electronics.
4. A strong pipeline of domestic orders.

Despite the positive outlook, the stock is currently trading at a high price-to-earnings (P/E) ratio of 89.5x for 2024 and 75.1x for 2025.

Conclusion:

The research report maintains an “Accumulate” rating for ABB India, with a revised target price of Rs 8,833, up from the previous target of Rs 8,400. The stock is valued at a P/E ratio of 76x for June 2026, the same as earlier.