Credit Suisse, ABB India - India order inflows down 42% YoY; valuations remain challenging

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ABB India ------------------------------------------------------------------- Maintain UNDERPERFORM
India order inflows down 42% YoY; valuations remain challenging



● ABB Group reported CY10 financials last week. India inflows were
down 42% YoY, with power segment order inflows down 72%
YoY. Minority interest declined about 33%, suggesting likely
muted India PAT. Of note, order inflows in Europe improved
substantially led by strength in the power segment – this is a
positive read for CGL.
● ABB’s competitive positioning is also not very strong, as evident
from deterioration in order inflows for the power segment. While a
large HVDC order is anticipated in CY11, the portion of order
meant for ABB India would be substantially lower than the
estimated order size of over Rs60 bn. (order in a JV with BHEL).
● ABB has also not won any Powergrid order since Sep-10, and we
expect moderation in short cycle automation inflows in the coming
months. Order inflows will hence remain muted even in 1H/CY11.
● ABB India reports on 23 Feb. On the weak order inflow, we revise
down our estimates pre CY10 annual results. We reduce
CY10/11E EPS by 53%/39% to Rs10.3/16.3. We revise our target
price to Rs575 (previously Rs603). Maintain UNDERPERFORM.


ABB’s commentary on order inflows in Europe was positive.
Performance in Europe has continued to sequentially strengthen over
the past few quarters. Continued improvements in Europe and general
strength in inflows (ex. India) is a positive read for Crompton Greaves.