ABB India shares surge 7% to hit new all-time high after UBS lifts target price

Shares of ABB India jumped 7% in today's early trade to touch a new all-time high of 6.341.90 apiece after the global brokerage firm UBS, in its latest, lifted the target price on the stock to 7,550 apiece from an earlier price target of 5,380.

A Ksheerasagar
First Published27 Mar 2024, 09:34 AM IST
Shares of ABB India jumped 6.60% in today's early trade to touch a new all-time high of  <span class='webrupee'>₹</span>6319.95 apiece
Shares of ABB India jumped 6.60% in today’s early trade to touch a new all-time high of ₹6319.95 apiece (Pixabay)

Shares of ABB India jumped 7% in today's early trade to touch a new all-time high of 6,341.90 apiece after the global brokerage firm UBS in its latest report lifted the target price on the stock to 7,550 apiece from an earlier price target of 5,380, citing a high double-digit growth across domestic and export orders from motion and low-voltage EP segments with a steady ramp-up in OPMs. 

It expects order inflow growth of 23% during 2023–26E, with revenue growth of around 21% on a 23% earnings CAGR.

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UBS also outlined a bullish scenario with a target price of 8,840 per share, while setting a downside valuation target of 4,840 per share, factoring in a more modest pace of order inflow and limited scope for margin expansion.

ABB India (ABB) is a 75%-owned subsidiary of Switzerland-based ABB Group, a global leader in power, automation products, and solutions with operations in more than 100 countries. Through its large base of manufacturing facilities, ABB is a leader in the process industry automation sector in India. ABB Group also uses India as a resource base for its international operations.

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The brokerage pointed out that ABB's low- and medium-voltage product suite is expanding in both range and geographical exposure, covering both conventional and emerging market segments. There is a clear focus among global firms, like SIEM and Schneider, along with ABB, on capturing long-term growth in electrification.

On the motion side, UBS said that mobility, including semi-high-speed rail, conventional rail, and metro, has led to the step-up in order inflow run rate, which it believes is sustainable on an annual basis (quarterly volatility might persist), given that ABB is focusing on expanding capacity commensurately to tap the growth opportunities. 

"We think there is ample scope for ABB to deliver on profitability, led by low/medium-voltage electrification and motion, both of which are enjoying strong demand, with ABB sharpening its focus on product range expansion and availability. We believe that ABB is the best play on the emerging infrastructure scale-up in low- and medium-voltage electrification," said UBS. 

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It says that despite near-term concerns over short-cycle order fatigue (especially in the motion division), there is plenty of scope for ABB to scale up its new order growth across motion (mobility-led positioning) and low/medium-voltage electrification product expansion, which it believes augurs well for margins for ABB even at current levels. 

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.

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First Published:27 Mar 2024, 09:34 AM IST
HomeMarketsStock MarketsABB India shares surge 7% to hit new all-time high after UBS lifts target price

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