ABB India Shares Under Pressure As UBS Downgrades Stock

Shares of ABB India fell on Friday morning as brokerage firm UBS downgraded ABB India to "neutral" from "buy".

Brokerage Views: Though the research firm downgraded the stock, it increased its target price to ₹9,100 from ₹8,830. Though the brokerage sees limited room for value rerating, the company’s earnings are expected to remain supportive. 

The brokerage expects two factors to make them positive on the utilities tech firm: higher quarterly order run rate and robust margins in its emerging portfolio. A quarterly order run rate beyond ₹3,800 crore from mobility or high base order growth will drive better earnings growth for the company, the research firm said.

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Robust margins in the emerging portfolio in electrification are powering ABB's margins higher than the brokerage's expectations, the research firm said. UBS views ABB as the best exposure to emerging infrastructure and niche products across conventional and new segments. 

In the March quarter, ABB India posted an 87.6% year-on-year rise in net profit to  ₹459.3 crore. The company's revenue jumped 27.8% to  ₹3,080.4 crore. Its EBITDA rose 98.1% to ₹565.2 crore while EBITDA margin soared to 18.4%, compared with 11.8% a year ago.

The company's total orders in the quarter jumped to a five-year high of ₹3,607 crore, driven by data centres, smart buildings and expansions in smaller cities, as well as the energy and logistics sectors

ABB India follows a January to December financial year. The company is expected to announce its Q2 results on August 8, 2024. 

Price Action: Shares of ABB India fell 1.32% to ₹8,346.50 on Friday morning. 

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