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Motilal Oswal Report
ABB India Ltd.'s Q1 CY24 results were much ahead of our estimates, driven largely by strong improvement in margin. Our thesis, as highlighted in our latest AR2023 update, of margin improvement is playing out quite well and we expect the company to keep benefiting from its pricing advantage, operating leverage gain, improving product mix toward higher-margin segments, and a wide product portfolio.
We expect a large part of these gains to sustain in the coming years amid a strong demand scenario.
We increase our estimates for CY24/25/26 by 23%/24%/20% to bake in Q1 CY24 performance and higher margins. We increase our target price to Rs 8,500 (from Rs 7,500), implying a price/earning of 70 times on June-26E earnings per share.
We maintain Buy and ABB remains our top pick in the sector.
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