- UBS upgrades ABB India rating from neutral to buy with target price raised to Rs 8,030
- The brokerage praises ABB India's growth in niche motion and electrification segments
- UBS highlights recovery in short-cycle industrial products after a weak phase
'Apologies, I wasn't aware of your game' - this basically sums up UBS' latest note on ABB India, as the brokerage firm has upgraded its rating from 'neutral' to 'buy' while significantly hiking the target price, citing that the markets have greatly misjudged the company's ability to tap into a larger market of niche emerging segments.
The brokerage firm has been left particularly impressed by ABB India's ability to tap into the niche motion and electrification segment, adding that short-cycle enablers are currently at an inflexion point, meaning segments which respond quickly to economic activity are starting to turn upward after a weak phase.
Keeping that in mind, UBS has upgraded ABB India from 'neutral' to 'buy' while hiking the target price from Rs 5,310 to Rs 8,030. The new target implies a 25% upside from current levels. Moreover, UBS has also added ABB India to the APAC Key Call list.
Overall, the brokerage firm sees favourable risk-reward in ABB India, with both structural and cyclical growth levers aligning together, potentially paving the way for growth going forward.
There is also a market shift in the share of niche/scalable end markets with 2-4x real GDP growth, meaning the company is getting more business from specialised, high-growth sectors. Demand for quick-turn industrial products had slowed earlier but is now starting to recover.
Finally, UBS added that the cascading effect of capex decisions, the budget, trade deals and a potential large-ticket traction makes ABB India a favourable pick, not only in the context of Indian markets but the APAC region as a whole.
Shares of ABB India currently trade with a relative strength index of 64, which suggests neutral market sentiment. The stock has given 23% returns on a year-to-date basis while appreciating 25% in the last 12 months.
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