ABB stock at Rs 1,200 is good for long term investors

ABB stock at Rs 1,200 is good for long term investors

By Rajiv Kapoor | 18 March, 2017
ABB, long term investors, UHVDC, Indian subcontinent, profitability, Transportation investments

ABB is a pioneering technology leader in electrification products, robotics and motion, industrial automation and power grids, serving customers in utilities, industry and transport and infrastructure globally. The company operates in more than 100 countries with about 132,000 employees.

ABB has been successfully investing on the Indian subcontinent and has expanded its manufacturing, engineering and R&D footprint by employing over 10,000 people. ABB has 12 manufacturing sites on the subcontinent and one of its seven corporate research centres around the world is based in India. Strong focus on research and development has resulted in a track record of innovative technology. The company today stands as the largest supplier of industrial motors, drives and power grids to the wind industry. ABB India helps its customers to use electrical power efficiently, to increase industrial productivity and to lower environmental impact in a sustainable way. The new orders in UHVDC (ultra high voltage direct current) transmission technology projects pioneered by ABB, which reduces losses to transmit clean energy over long distances would be key to realising the government’s renewable energy vision and reliable power for all. Transportation investments led by railways, Metro projects and renewables by wind provide for growth. On the other hand, sectoral focus in emerging areas like food and beverage and data centres continues to show good progress.

The full year order book surged to Rs 12,466 crore, while orders received for the quarter ending December 2016 were at a high of Rs 5,628 crore. The order backlog of Rs 11,821 crore as on December 31, 2016 provides a solid visibility for future revenue. In line with the government’s Make in India initiative, ABB India has been investing to deepen footprint in the country, innovating and deploying global technology for domestic and international markets. The robust order backlog complements ABB India’s proven execution ability to provide a strong foundation for profitable growth in the future. Value added offerings, continued focus on cash and cost, with a portfolio best positioned to leverage the green-shoots of energy has resulted in a consistent profit uptrend for the last five years. Continuous improvement in profitability, coupled with execution excellence initiatives and efforts to improve net working capital have resulted in a significant gain in cash at the close of the year. Profit before tax (PBT) increased to Rs 224 crore for the quarter and Rs 576 crore for the year. In a market of select growth and tightening investments, ABB India’s differentiated position was reflected in profit after tax improving to Rs 147 crore for the quarter and Rs 376 crore for the year ended December 31, 2016. The ABB stock currently quoting at Rs 1,200 is a fundamentally excellent stock for long term investors.

Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.

 

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