X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
ABB: Making a strong comeback - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Feb 23, 2001

    ABB: Making a strong comeback

    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: Large Orders Remain Muted (Quarterly Results Update - Detailed)

    Aug 2, 2017

    Decisions on government initiatives and private investments were stalled in anticipation of upcoming tax restructure.

    BHEL: Margins Dip into the Negative (Quarterly Results Update - Detailed)

    Aug 14, 2017

    The company also saw order inflows of Rs 18 billion during the quarter, which was a massive 41% YoY lower than the previous year's quarter.

    Cummins Ltd: Domestic Revenues the Saving Grace (Quarterly Results Update - Detailed)

    Aug 14, 2017

    The domestic economy continues to grow largely in areas which are positively impacted through continuing government investments in infrastructure.

    L&T: Amidst a Challenging Business Environment (Quarterly Results Update - Detailed)

    Aug 1, 2017

    Bank credit to industry remained muted and investment momentum was driven mostly by public sector spending.

    L&T: Private Sector Capex Remains in a Tizzy (Quarterly Results Update - Detailed)

    Jul 24, 2017

    Vast majority of private players remain more concerned with debt payback rather than starting new projects.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    ABB INDIA LTD. SHARE PRICE


    Aug 23, 2017 11:56 AM

    TRACK ABB INDIA LTD.

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

    MORE ON ABB INDIA LTD.

    ABB INDIA LTD. - JYOTI STRUCTURE COMPARISON

    Compare Company With Charts

    COMPARE ABB INDIA LTD. WITH

    MARKET STATS