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Brokerages have raised the target price of ABB India Ltd. after it reported a robust quarterly performance, led by execution pickup across segments.
With a favourable product mix, higher service income, and operating leverage, the company was able to expand its margin by 420 basis points year-on-year, Yes Securities (India) Ltd. said in a note on Sunday.
An increasing number of Indian automobile original equipment manufacturers are investing in robotics, which is gaining a lot of traction, it said. “There is (a) healthy optimism in the overall domestic market, based on which the company sees a robust pipeline.”
The management of the engineering services company mentioned that operational efficiency and better project execution drove profitability, according to Jefferies Financial Group Inc.
The company’s consolidated net profit rose 111% year-on-year to Rs 295.6 crore in the June quarter, according to an exchange filing. That compares with the Rs 190.7 crore consensus estimate of analysts tracked by Bloomberg.
The order book is up 29% year-year and provides revenue growth visibility. Margin expanded due to higher capacity utilisation and lower project contributions. Railways, data centres, renewables, warehouses, and logistics are focus areas, Jefferies said.
Shares of ABB India fell as much as 6.02% to hit an intraday low of Rs 4,254.15 apiece. It pared losses to trade 3.29% lower at Rs 4,377.80 per share, compared to a 0.24% decline in the benchmark NSE Nifty 50 as of 12:20 p.m.
It has risen nearly 62.13% year-to-date. Total traded volume stood at 3.9 times its 30-day average. The relative strength index was 45.98.
Of the 32 analysts tracking ABB India, 14 maintain a ‘buy’ rating on the stock, 11 recommend a ‘hold’, and five suggest a ‘sell’, according to Bloomberg data. The average of 12-month analyst price targets implies a potential downside of 2.4%.
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