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: So near yet so far… - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Oct 1, 2001

    ABB: So near yet so far…

    Asea Brown Boveri (ABB), the transmission and distribution equipment (T&D) major, has seen quite a correction (down 20%) in price since the company declared its first half results in July end. At that time, the company was trading at a P/E of 36x 1HFY02 annualised earnings.

    The Rs 7.9 bn ABB India manufactures motors, generators and alternators upto 20 megawatt (MW). It commands a 19% share of the Rs 14 bn high tension (HT) switchgear segment. It also manufactures control systems and mini/micro processor-based systems. ABB has also merged ABB Instrumentation, ABB Analytical, ABB Lenzohm Service and Introl India with itself quite recently. The appointed date of amalgamation as per the scheme is April 1, 2001.

    So far in FY02 the company has set a good growth momentum for itself. Till 1HFY02 ABB India has shown a 36% turnover growth and a 25% bottomline growth. On the surface the performance does look good. However, despite the surge in turnover ABB has not been able to contain its expenditure. Its expenditure during 1HFY02 surged 35% YoY. A huge increase in tax outgo also put the brakes on bottomline growth. In fact, in 2QFY02 though ABB’s turnover improved 37% YoY, it actually recorded a 11% decline in profits during the period.

    Going forward the company is likely to continue showing encouraging growth in turnover YoY owing to a significant order backlog of Rs 6,900 m (based on July end data). Also, the merger move would add another Rs 700 m to its topline annually. However, despite this, its margins are likely to remain under pressure, due to a more or less similar increase in expenditure and higher tax outgo.

    In the long run, ABB India’s future seems bright owing to the huge latent potential for power equipment. It would be one of the key players in India’s power infrastructure development. However, it is still to get it’s costing under control. Also, the power equipment business is a cycle of ups and downs. Some quarters there is exceptional business and some are lean quarters, depending on when the power plant gets completed. In the past, the performance of ABB has been quite erratic and one cannot draw solace from it.

    At the current price of Rs 198 the stock trades at a P/E of 29x its 1HFY02 annualised earnings.

     

     

    Equitymaster requests your view! Post a comment on "ABB: So near yet so far… ". 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

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    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.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    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 18, 2017 03:18 PM

    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. 8-QTR ANALYSIS

    Detailed Quarterly Results With Charts

    COMPARE ABB INDIA LTD. WITH

    MARKET STATS