ABB: Good performance but… - 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: Good performance but…

Jul 24, 2001

Asea Brown Boveri (ABB) India, has continued its encouraging growth momentum in the second quarter of FY02. Its net sales have grown at 37% during 2QFY02. It topline had grown by a similar 36% in 1QFY02 also. But depite this its bottomline during 2QFY02 has declined by 11% due to a very high tax outgo.

(Rs m)2QFY012QFY02Change1HFY011HFY02Change
Net Sales1,6452,25437.0%3,1364,27636.3%
Other Income5047-6.1%7665-13.9%
Expenditure1,5262,09737.4%2,9834,01934.7%
Operating Profit (EBDIT)11915731.6%15425666.9%
Operating Profit Margin (%)7.3%7.0% 4.9%6.0% 
Interest 11113.4%232717.1%
Depreciation42432.5%83852.3%
Profit before Tax11715028.6%12421069.9%
Tax853562.5%866725.0%
Profit after Tax/(Loss)10997-10.8%11614424.5%
Net profit margin (%)6.6%4.3% 3.7%3.4% 
No. of Shares (eoy) (m)41.441.4 41.441.4 
Earnings per share*10.59.4 5.67.0 
Current P/e ratio 26.6  35.7 
*(annualised)      

ABB is one of the foremost suppliers of high-end power transmission and distribution (T&D) equipment in India. The Rs 7.9 billion (US$ 170 million) ABB India manufactures motors, generators and alternators upto 200 megawatt (MW). It commands a 19 percent share of the Rs 14 billion (US$ 305 million) high tension (HT) switchgear segment. It also manufactures control systems and mini/micro processor-based systems.

On a consolidated half yearly basis, ABB's turnover improved 36% and its bottomline recorded a growth of 25% despite the higher tax outgo. ABB has to provision for higher taxes in view of the increased profits this quarter. Also, in the first half of last year, the company's net tax outgo was less due to a a write back of Rs 23 m, which accrued due to excess tax provisioning earlier. If you look at the profit before tax growth at 29% in 2QFY02, the performance is good.

However, ABB's order intake during 1HFY02 declined 37% to Rs 4,191 m as compared to 1HFY01. The shortfall in orders was mainly due to the lack of green field investments. In FY01, the company had received huge infrastructure orders from customers such as WBSEB, MSEB, APTRANSCO, NTPC Talcher and Delhi Metro Rail Corporation. This helped ABB register a significant 52% jump in order intake to Rs 11 bn during FY01.

Despite the decline in order intake, the company's managing director, Mr. K. K. Kaura, seems very confident. In the press release Mr. Kaura has said, and we quote: "The revenue growth is expected to continue, supported by our strong current order backlog of Rs 6,900 m. We will continue to focus on all domestic and overseas opportunities to maximise our order intake, especially in the the power transmission and distribution sectors where we see encouraging signs."

In another development, the board of Directors ABB Limited in a meeting held today approved the scheme of amalgamation of ABB Instrumentation, ABB Analytical, ABB Lenzohm Service and Introl India with the company. The appointed date of amalgamation as per the scheme is April 1, 2001. The aforesaid scheme is subject to approvals due to which the current quarterly results do not include the effect of the proposed amalgamation.

The above 4 companies had a combined turnover of Rs 700 m in the year 2000. The merger will marginally increase ABB Group shareholding in ABB India from the current level of 51% to 52%.

At Rs 248 the stock is trading at a P/e of around 36 times its annualised 1HFY02 earnings. Though the company's growth in turnover is encouraging, the valuation is on the higher side. Tax outgo is likely to continually increase with improving turnover performance. Also, ABB has failed to keep a tab on its operational costs, which have increased at a faster clip than turnover during 2QFY02. This has deflated its operating margins, though only marginally. If this continues in the coming quarter too, turnover growth may not perk the bottomline growth by much.

Equitymaster requests your view! Post a comment on "ABB: Good performance but…". Click here!

  

More Views on News

ABB INDIA 2019-20 Annual Report Analysis (Annual Result Update)

Oct 27, 2021 | Updated on Oct 27, 2021

Here's an analysis of the annual report of ABB INDIA for 2019-20. It includes a full income statement, balance sheet and cash flow analysis of ABB INDIA. Also includes updates on the valuation of ABB INDIA.

ABB INDIA Announces Quarterly Results (4QFY21); Net Profit Up 128.2% (Quarterly Result Update)

Jul 8, 2021 | Updated on Jul 8, 2021

For the quarter ended March 2021, ABB INDIA has posted a net profit of Rs 2 bn (up 128.2% YoY). Sales on the other hand came in at Rs 16 bn (up 7.0% YoY). Read on for a complete analysis of ABB INDIA's quarterly results.

Infrastructure Boom Ahead. Here are 3 Ways to Play It... (Views On News)

Aug 24, 2021

India is expected to become the third largest construction market next year. For that, it needs huge investments.

G R Infraprojects Makes a Bumper Listing on Bourses. Big Gains for IPO Investors (Views On News)

Jul 19, 2021

GR Infra shares were subscribed over 100 times in its IPO.

Here's Why the Stock of Ashoka Buildcon was in Focus Today (Views On News)

Jul 13, 2021

Ashoka Buildcon shares up on bagging NHAI project.

More Views on News

Most Popular

10 Indian Companies with the Fastest Growth in Dividend Payouts... (Views On News)

Jan 10, 2022

These companies have been consistently paying higher dividends for several years.

Tata Steel vs SAIL: Which Stock is Better? (Views On News)

Jan 13, 2022

With government initiatives set to boost the steel sector, find out who has a better chance of coming out on top.

Watch Out for these 4 Indian Companies Betting Big on EV Supply Chain (Views On News)

Jan 11, 2022

The upside in supply chain players could be huge but a delay in the transition to EVs, or any policy related hiccups could end the momentum.

Tech Mahindra's CTC Acquisition: Too Expensive? (Views On News)

Jan 18, 2022

Tech Mahindra's acquisition of European IT-company fails to excite investors.

Time to Buy Energy Stocks (Fast Profits Daily)

Jan 14, 2022

Energy is a sector that looks set to take off. It's time to get in.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

ABB INDIA SHARE PRICE


Jan 21, 2022 02:35 PM

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

COMPARE ABB INDIA WITH

MARKET STATS