Following the release of strong March quarter (Q1CY23) earnings, shares of ABB India Ltd set a new 52-week high of ₹3,789.60 on the National Stock Exchange on Monday. The financial year for ABB India runs from January to December. The adjusted net profit, at ₹245.2 crore, was more than expected. In Q1CY23, revenue increased by 22.5% year over year (YoY), thanks to better execution and a positive product mix.
The 36.4% YoY increase in order inflows to ₹3,125 crores across verticals, which came after two consecutive quarters of weak order inflows, was a noteworthy highlight. According to analysts, ABB’s Q1CY23 order book, which is estimated to be worth ₹7,170 crores, offers revenue visibility for the upcoming quarters.
Yes Securities Ltd raises earnings projections for ABB India Ltd due to strong business outlook
Todays business news of India: The management predicts continued order momentum, especially for short-cycle orders, and is upbeat about the prospects for capital expenditures. ABB is also anticipated to gain from the diversification of the world’s supply chains.
Some analysts have increased their earnings projections as a result of these factors. According to analysts at Yes Securities Ltd, ABB’s solid business strategy, robust worldwide distribution network, a broad portfolio of businesses, and strong cash position will help the company as the economy picks up speed.
Commercial News India: In a report, they raise their CY23E/CY24E earnings per share expectations by 27%/14%, respectively, factoring in a higher margin profile and a strong business outlook. Given that the stock has increased by almost 40% so far this year, the crucial question is whether it still has room to rise after the most recent rally.
“Although we value ABB’s short-cycle business strategy, which accelerates the conversion of the order book to earnings, we think the CMP takes the bull scenario of 14–15% order inflow with 11–12% margins into account. Given the few triggers, we anticipate limited upside even after accounting for the best-case scenario mentioned above,” Nuvama Research stated in a research dated May 5. The report also drew attention to persistent issues, including excessive royalties in comparison to global peer sets and the durability of order intake and operational margin growth.