MOSL: ABB (Sell)-Robotics & Motion drives strong performance-Maintaining Sell given expensive valuations
ABB: Robotics & Motion drives strong performance; Maintaining Sell given expensive valuations
(ABB IN, Mkt Cap USD4.4b, CMP INR1449, TP INR1190, 18% Downside, Sell)
- Healthy growth in continued business: Revenue increased 18% YoY to INR18.5b in 1QCY19. EBITDA grew 63% YoY to INR1.5b, while PAT rose 95% YoY to INR890m. ABB has been showing 'power grids' as a discontinued business, as it has entered into an agreement with Hitachi - at the global level - to sell this business. During the quarter, discontinued business revenue declined 6% YoY to INR908m and EBIT was down 45% YoY to INR0.5b with the margin contracting 380bp YoY to 5.5%.
- Margins supported by better revenue mix, operating leverage: The operating margin improved 220bp YoY to 7.9% in the quarter, supported by a better revenue mix, improved capacity utilization and operating leverage. The EBIT margin shrank for both industrial automation (-290bp to 10.1%) and electrification projects (-150bp to 8.8%) but improved for Robotics & Motion (R&M; +270bp YoY to 9.9%). Notably, other expenses declined during the quarter (15.2% of sales v/s 16.2% in 1QCY18).
ABB is engaged in power and automation technologies that enable utility and industry customers to improve their performance while lowering environmental impact. Co. works with customers to engineer and install networks, facilities and plants with particular emphasis on enhancing efficiency, reliability and productivity for customers who generate, convert, transmit, distribute and consume energy. Co.'s portfolio ranges from switches and sockets to robots, and from large transformers to control systems that manage entire power networks and factories.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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