ABB: Growth story continues... - Views on News from Equitymaster

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

  • MyStocks


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

ABB: Growth story continues...

Jul 24, 2003

ABB India posted impressive 2QFY04 results yesterday, with topline growing by 16% to Rs 3,303 m. The T&D equipment major’s operating profits went up by 14% and net profits were up 39% YoY during the quarter. The operating margins of the company remained under pressure and took a marginal dip. Hike in material costs was primarily responsible for the margin pressure. To put things in perspective, while material costs to revenues were 65% in 2QFY03, they surged to over 68% during 2QFY04.

(Rs m)2QFY032QFY04Change1HFY031HFY04Change
Net Sales 2,849 3,303 16.0%5,260 6,140 16.7%
Other Income 62 76 23.4%87 142 62.7%
Total expenditure 2,589 3,007 16.1%4,890 5,732 17.2%
Operating Profit (EBDIT) 260 296 14.0%370 408 10.3%
Operating Profit Margin (%)9.1%9.0% 7.0%6.6% 
Interest1112.8%4 3 -25.9%
Depreciation4645-2.3%90 89 -0.7%
Profit before Tax27532618.9%364 458 25.9%
Extraordinary items14423361.3%144 233 61.3%
PBT41955933.5%508 691 36.1%
Tax9310714.4%120 151 25.3%
Profit after Tax/(Loss)32645339.0%388 540 39.3%
Net profit margin (%)11.4%13.7% 7.4%8.8% 
No. of Shares (eoy) (m)42.442.4 42.442.4 
Earnings per share* (Rs)30.742.7 18.325.5 
Current P/e ratio 8.7  14.6 

Power technologies contributed 55% to the net sales during the quarter and showed a marginal growth of 2% in revenues but power business being contract based, quarterly comparison may not give the true picture. In 1HFY04, power technologies business showed a growth of 7%, which is satisfactory, though PBIT margins have come down marginally. Company has received a good volume of orders from power business, so topline growth going forward should not be a problem.

Automation technologies contributed 40% to net sales and showed a significant growth of 25% in revenues during 2QFY04. The business grew by 16% in the first half of FY04. Consequently, automation technologies is a key contributor to ABB’s topline growth. The PBIT margins of this business were static for the quarter. Automation business has perked up for the industry as a whole, as user industries are opting for smart and intelligent devices to run the systems and the growth achieved indicates that management is ready to take up the opportunity.

The company booked orders worth Rs 8,327 m during the half-year ended June 2003, 41% higher compared with the same period last year. For 2QFY04 orders booked amounted to Rs 4,525 m (up 44% YoY). The major contributors to this strong order book were utility and industrial customers for power and automation technologies.

Export orders during the first half of 2003 amounted to Rs 2,101 m as compared with Rs 747 m in same period last year. Infact, for entire FY03 export orders amounted to only Rs 1,653 m. The order backlog further strengthened to Rs 10,732 m as compared to Rs 8,794 m in the beginning of FY04. The current order backlog is over 90% of ABB’s FY03 revenues.

At the current price of Rs 372 the ABB stock trades at a P/E of 14.6x annualised 1HFY04 earnings. However, if we exclude the extraordinary income, then the P/E multiple stands at 25.7x annualised 1HFY04 earnings. Though the valuation does look high based on the first half earnings numbers, we believe that the second half of FY04 will show more strength.

Equitymaster requests your view! Post a comment on "ABB: Growth story continues...". 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.

These 5 Penny Stocks are Held by Rakesh Jhunjhunwala. Worth a Look? (Views On News)

Jan 18, 2022

Rakesh Jhunjhunwala is holding these penny stocks in his portfolio for several years now.


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


Jan 21, 2022 (Close)


  • 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