ABB: Making a strong comeback - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

ABB: Making a strong comeback

Feb 23, 2001

Asea Brown Boveri, the power transmission and distribution (T&D) equipment major seems on the right track. Since hiving off its power business, ABB has improved its performance in FY01. The company's approach to cost cutting and its focus on key businesses is indeed commendable. As a result, ABB finished the year with a 45% growth in bottomline YoY.

(Rs m) 4QFY00 4QFY01 Change FY00 FY01 Change
Net Sales 2,597 2,861 10.1% 7,758 7,933 2.3%
Other Income 106 49 -53.9% 176 136 -22.7%
Expenditure 2,283 2,477 8.5% 7,182 7,157 -0.4%
Operating Profit (EBDIT) 314 383 22.2% 576 776 34.8%
Operating Profit Margin (%) 12.1% 13.4%   7.4% 9.8%  
Interest 17 8 -54.4% 61 39 -36.2%
Depreciation 38 39 2.4% 158 168 6.1%
Profit before Tax 365 386 5.7% 532 705 32.6%
Tax 117 95 -18.8% 160 165 3.1%
Profit after Tax/(Loss) 248 291 17.3% 372 540 45.2%
Net profit margin (%) 9.5% 10.2%   4.8% 6.8%  
No. of Shares (eoy) (m) 41.4 41.4   41.4 41.4  
Earnings per share* 23.9 28.1   9.0 13.0  
*(annualised)            
Current P/e ratio         24.2  

The company's turnover however, improved by a marginal 2%. But if we exclude the power business from the previous year's performance the rise in turnover is higher at 5%.

Large infrastructure orders from customers such as WBSEB, MSEB, APTRANSCO, NTPC Talcher and Delhi Metro Rail Corporation resulted in the company clocking a significant 52% jump in order intake to Rs 11 bn. The company's net cash position for the year stood at a positive Rs 127 m (the same level as at the end of the previous year). This is mainly attributable to the high level of revenues in the last few months of the year contributing to higher accounts receivables.

ABB's efforts to rationalise costs seem to be bearing fruit. Its interest costs declined by 36% as a result of pruning its debt levels. Its operating costs too, declined marginally. The company has been continously realigning its employee cost structure. This year the company wrote off Rs 50 m as VRS expenses.

ABB has been focusing on seamless solutions for its clients and is working towards providing real time services. The company's T&D business is also on an upswing. This focus is likely to improve its operating margins in the next few years.

The bourses have taken notice of the improving business prospects of ABB. In the last six months the ABB stock has run up by 45%. At Rs 315, the stock currently quotes at a P/e multiple of 24 times its FY01 earnings. If we go by the P/e multiple valuations, then the stock is evenly valued. But with the company expected to improve its topline in FY02 coupled with an improvement in its operating margins, the stock is likely to see an upward re-rating.


Equitymaster requests your view! Post a comment on "ABB: Making a strong comeback". Click here!

  

More Views on News

ABB INDIA Announces Quarterly Results (4QFY20); Net Profit Down 25.9% (Quarterly Result Update)

May 15, 2020 | Updated on May 15, 2020

For the quarter ended March 2020, ABB INDIA has posted a net profit of Rs 660 m (down 25.9% YoY). Sales on the other hand came in at Rs 15 bn (down 17.7% YoY). Read on for a complete analysis of ABB INDIA's quarterly results.

ABB INDIA Announces Quarterly Results (3QFY20); Net Profit Down 49.7% (Quarterly Result Update)

Feb 14, 2020 | Updated on Feb 14, 2020

For the quarter ended December 2019, ABB INDIA has posted a net profit of Rs 647 m (down 49.7% YoY). Sales on the other hand came in at Rs 20 bn (down 0.7% YoY). Read on for a complete analysis of ABB INDIA's quarterly results.

Garden Reach Shipbuilders and Engineers Ltd: Is This PSU Shipbuilder Worth Betting On? (IPO)

Sep 24, 2018

Should you apply for the IPO of Garden Reach Shipbuilders and Engineers Ltd?

More Views on News

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

I Recommended this Stock over Page Industries because it's Relevant to Doubling Your Income (Profit Hunter)

Sep 7, 2020

Things are not often what they seem in the market and how you can take advantage of this.

The NASDAQ Whale Could Harm Your Portfolio (Fast Profits Daily)

Sep 7, 2020

The discovery of Softbank pushing up prices on the NASDAQ will cause volatility in the market. Stay alert!

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

ABB INDIA SHARE PRICE


Sep 18, 2020 (Close)

TRACK ABB INDIA

  • Track your investment in ABB INDIA with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

ABB INDIA - SHANGHAI ELEC. COMPARISON

COMPARE ABB INDIA WITH

MARKET STATS