ABB is set for a flattish growth trajectory over the next couple of years led by slowdown in industrial clients and capex plan deferrals.
We expect order inflow and revenue to grow at modest 6% and 9.6%, respectively, in CY09. We also expect PAT to remain flat at Rs5.4 billion for CY09.
Moreover, incumbents like Areva T&D and Crompton (post acquisition of Pauwels, Ganz and Microsol) now have the same product and project expertise thereby diluting ABB’s edge on both these turfs.
Valuation premium dilution vs peers should thus follow. We rate the stock a SELL with a target price of Rs303 (14% downside).