Shares of ABB India surged 9 per cent to Rs 2,189 on the BSE in Thursday’s intra-day trade after the company reported a solid performance in the March quarter (Q1CY22). Its standalone net profit more-than-doubled to Rs 370 crore on the back of strong operational performance, while Ebitda margin expanded 170 basis points. The company, engaged in heavy electrical equipment business, had posted profit of Rs 151 crore in Q1CY21.
The company's revenue grew 20.8 per cent year on year (YoY) at Rs 1,968 crore from Rs 1,629 crore in the year-ago quarter. Operational earnings before interest, taxes, depreciation, and amortization (ebitda) margin improved 170 bps to 8.5 per cent from 6.8 per cent.
The capacity utilization & operation efficiencies yield traction in profit during the quarter. Total orders surged to Rs 2,291 crore, the highest for the first quarter in the last five years. The company said it continues to have a strong order backlog as of March 31, 2022, at Rs 5,229 crore, which provides revenue visibility and is well aligned to support growth plans in the coming quarters.
"The various government projects incentivizing local production, fast tracking infrastructure projects, housing and water for all, specific measures for various sectors like solar, water, data centers, metros, etc. is likely to have incremental positive impact and provide some cushion for the macro uncertainties," ABB India said.
The company further said it is benefitting from business opportunities to render greater sustainability and efficiency in certain core sectors of energy, metals, railways & metro, and cement.
"We value ABB at 60x CY23F EPS of Rs 34.2 to arrive at our target price of Rs 2,052. We prefer Honeywell Automation in the segment. Delivery on EBITDA margin and order inflows are key upside risks while sluggish industrial capex and commodity price rise are downside risks," wrote analysts at Nomura in a post results note.