ABB India Q3 Results Review - Changing Mix Of Order Book Hurts The Quarter; Reiterate 'Buy': Motilal Oswal

Motilal Oswal Report

ABB India Ltd.’s Q3 CY24 performance was below our expectations due to lower-than-expected order inflows and execution. The quarter was hit by the changing mix of order book towards a higher share of long-gestation, large-sized orders.

Margin performance, though, remained strong YoY, with improved pricing and lower raw material costs. We expect the near-term execution velocity to be affected by slower-than-expected growth in order inflows and a shift of order book towards longer-gestation projects.

However, with higher value-added content in large-sized order inflows, we expect margin performance to remain healthy. Order inflow growth across segments, except Electrification, was hit by decision delays from the private sector and high base in select segments.

We cut our estimates by 9%/10%/11% for CY24E/CY25E/ CY26E to factor in 9M CY24 performance and the near-term impact on execution due to the longer execution cycle of orders. Our revised target price stands at Rs 8,500 (versus Rs 9,500 earlier), implying 72 times P/E on Dec’26E EPS.

We continue to maintain our positive stance on ABB based on its ability to benefit from the high growth segments with its wide offerings and deeper penetration network. Reiterate Buy.

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