ABB nets jumps 283% in 3QFY01, sans VRS - Views on News from Equitymaster

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ABB nets jumps 283% in 3QFY01, sans VRS

Oct 24, 2000

Asea Brown Boveri, the power transmission and distribution (T&D) equipment major has turned in a superlative performance in 3QFY01. The company's revenues have jumped 28% over the corresponding quarter in 1999. Its bottomline has grown by a resounding 283% to Rs 134 m.

(Rs m) 3QFY00 3QFY01 Change
Orders received 1,571 2,539 61.6%
Revenues 1,573 1,947 23.8%
Depreciation 34 46 35.3%
Profit before Tax 50 196 292.0%
Tax 15 62 313.3%
Profit after Tax/(Loss) 35 134 282.9%
Net profit margin (%) 2.2% 5.3%  
No. of Shares (eoy) (m) 41.4 41.4  
Earnings per share* 3.4 12.9  
*(annualised)      
Current P/e ratio   15.9  

The jump in net profits is not only because of the jump in revenues but also because of lower voluntary retirement expenses (VRS), a part of the previous year's restructuring exercise. If we consolidate the company's first three quarters, it shows that ABB's cumulative order intake is up by 73% and its net profits are up 37% over the same period in 1999.

The company has received major orders in the third quarter from National Thermal Power Corporation (NTPC) and Bhakra Beas Management Board. These orders are worth Rs 350 m. As a result of its improved order intake, the company is likely to continue its performance even in its final quarter in December 2000.

The company's stock at Rs 206 trades at a P/e multiple of 15.9 times its FY01 earnings. This is low compared to its historical P/e's which ranged between 24-30 times. We expect the stock to see a lot of positive activity in the coming days, in light of the current performance.

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